China loans for PH firmed up

The Philippine and Chinese governments are set to sign by midyear the loan agreements for the three big-ticket infrastructure projects to be financed by the mainland.

Finance Assistant Secretary Maria Edita Z. Tan told reporters that for the Metropolitan Waterworks and Sewerage System’s P10.9-billion New Centennial Water Source-Kaliwa Dam, the signing was tentatively scheduled between the second and third quarters of this year.

For the National Irrigation Administration’s P2.7-billion Chico River Pump Irrigation Facility as well as the Department of Transportation’s P151-billion Philippine National Railways-South Long Haul Railway, the loan agreements were set to be signed between the third and fourth quarters of 2018.

These three projects were part of the “first basket” of projects to be funded by official development assistance (ODA) from China.

“The process is actually they [prospective Chinese contractors] have to go through the bidding, after which we would be able to identify how much is the loan. And then, we have to go through our own processes—we have to secure all the necessary approvals like the Monetary Board’s special authority, and from the President, the forward obligational authority. And then after which we will negotiate the loan and make it effective,” Tan explained.

Expected to bid for the MWSS-led Kaliwa Dam project are China Energy Engineering Co. Ltd., PowerChina Ltd. as well as a consortium of Guangdong Foreign Construction Co. Ltd. and Guangdong Yuantian Engineering Co. Ltd.

For the NIA’s P2.7-billion Chico River Pump Irrigation Facility in Cagayan and Kalinga provinces, the potential bidders are China CAMC Engineering Co. Ltd., China Geo-Engineering Corp. and Qingdao Municipal Construction Group Co. Ltd.

Finance Secretary Carlos Dominguez III had said that they were negotiating that the Chinese government charge the ODA loans with an interest rate lower than 2 percent a year.

The Export-Import Bank of China will cover 85 percent of the total contract amounts of the Kaliwa Dam as well as the Chico River Pump Irrigation Facility projects. China will provide soft loans estimated at $234.92 million for the dam project and $72.49 million for the river project.

The DOF had said that a total of $7.34 billion in loans and grants had already been committed by China to finance not only the Duterte administration’s ambitious infrastructure program but also the reconstruction and rehabilitation of war-torn Marawi City.

Meantime, CLSA, the offshore platform of Chinese investment bank CITIC Securities, is working on the finance for a new $10-billion airport in Manila as part of its push into Southeast Asia and China’s ambitious Belt and Road initiative.

The airport project, to be developed south of the Philippine capital, is still awaiting government approval but CLSA has held preliminary talks with potential Chinese backers for the deal, CLSA chair Tang Zhenyi told Reuters.

“It looks like we are in good shape to do this. It’s a $10-billion minimum project,” he said. “Citic and CLSA are in the perfect position to talk with all the Chinese financial institutions.”

Tang and CLSA did not give the location or further details of the project. Local media have reported competing airport proposals are currently being studied by the Philippines government.