Gov’t eyes settlement of Northrail dispute

YOKOHAMA, JAPAN— The Philippine government is in discussions with China to hopefully settle the billions in pesos owed for the botched Northrail project, Finance Secretary Carlos G. Dominguez III said.

“It’s being worked on. But you know, we have to settle all of these issues. Sitting down and suing each other is contemplating the past and arguing the past. We should be forward-looking and if we can settle those issues, we should settle them,” Dominguez told reporters on the sidelines of the Asian Development Banks 50th annual meeting.

“Why put so much management time and expense in that when [we can] settle this thing and move ahead?” Dominguez added.

The finance chief had said that the government owed P10 billion for the Northrail project, while also facing arbitration after the previous administration canceled it.

“We’re spending all this money, we continue to spend money. I signed this huge check for that thing that never gets done. I tell you, my hands bleed when I do that. And there’s some more to pay so let’s finish it,” Dominguez said.

“What’s past is past. Everybody made a mistake here, let’s move ahead. I think that’s the right way to go. Move on, let go,” he added.

According to Dominguez, unofficial discussions had been so far between the Duterte administration’s economic managers and Chinese officials.

As for the terms for settlement, Dominguez said that was something to be negotiated, but in general, “the attitude is let’s settle it [because] it’s useless to keep on arguing about it.”

Separately, Socioeconomic Planning Secretary Ernesto M. Pernia said discussions would touch on possibly writing off the debt or the damages.

A flagship project of the Arroyo administration, the 80-kilometer railroad was to link Caloocan City with an international airport in the former Clark Airfield in Pampanga.

When he took over in 2010, former President Aquino ordered a review of the contract between Northrail and China National Machinery and Equipment Corp. Group (CNMEG) to build the railway following allegations of overprice as its cost rose from an initial $503 million to about $2 billion.

A 2005 study by the UP Law Center showed that the Northrail contract had been improperly packaged as an executive agreement to evade public bidding. In 2007, the Monetary Board approved a $500-million long-term loan from China Eximbank that would finance the first section of Phase I of the project.

The completion of the first phase of the project, a 42-kilometer train line that would connect Caloocan City to Malolos City in Bulacan province, was earlier moved to 2013. In 2012, the Supreme Court ruled that CNMEG-Northrail agreement was not an executive agreement and that CNMEG was not immune from suit.

It remanded to the Makati regional trial court for further hearing a case questioning the validity of the contract and the loan agreement. —BEN O. DE VERA