China loans to finance Luzon, Mindanao railways

The rollout of two massive railway projects in Central Luzon and Mindanao will be financed by Chinese loans, the Department of Finance said on Wednesday.

During the Philippine delegation’s courtesy visit on Tuesday on China Vice President Wang Qishan in Beijing, Finance Secretary Carlos Dominguez III said that the Philippines and China were “working towards beginning the implementation of two rail projects—the Subic-Clark Railway Project in Luzon and the Mindanao Railway Project.”

The P50.03-billion Subic-Clark Railway Project connecting the two freeport zones in Central Luzon will involve the construction of a 71.13-kilometer rail, including a 64.19-km mainline between Clark Freeport Zone and Subic Bay Freeport Zone, as well as a 6.94-km spur line connecting the mainline to the Subic Bay Port New Container Terminal.

The Subic-Clark Railway will have an exclusive right-of-way parallel to the Subic-Clark-Tarlac Expressway (SCTEx).

According to National Economic and Development Authority (Neda) documents as of Jan. 31, 2019, the construction of the Subic-Clark Railway will start in July this year and be finished by July 2022.

“The Chinese side provided the short list of qualified Chinese companies recommended by the Ministry of Commerce on Nov. 1, 2018. The project is in its preprocurement stage—DOTr (the Department of Transportation) and BCDA (Bases Conversion and Development Authority) are currently preparing the contract and bidding documents,” Neda said.

Meanwhile, the P35.26-billion first phase of the Mindanao Railway Project will run on a 102-km nonelectrified, single-track rail across the cities of Digos, Davao and Tagum in Davao Region.

The interagency Investment Coordination Committee-Cabinet Committee approved last October the shift in financing to official development assistance (ODA). The Duterte administration’s previous plan was to build the Digos-Davao-Tagum line using the national budget.

The government wanted to start implementation of the first phase of the Mindanao Railway this year and completion in 2022.

The second and third phases of the Mindanao Railway loop will also be financed by ODA and were both “included in the indicative projects proposed for feasibility study assistance by the Chinese government that was submitted to the Chinese embassy in the Philippines on Aug. 20, 2018, and parallel submission to Chinese Ministry of Commerce in Beijing on Aug. 24, 2018,” Neda said.

Besides the two big-ticket railway projects included in the Duterte administration’s ambitious “Build, Build, Build” program, Dominguez said the Davao-Samal Bridge and the Panay-Guimaras-Negros Inter-island Bridge projects were also in the pipeline for possible financing by China.

The P27.16-billion bridge soon to rise in Western Visayas will involve the construction of a 5.7-km bridge between Panay and Guimaras on top of another 12.3-km bridge between Guimaras and Negros.

So far, the Philippines has obtained two US dollar-denominated loans from China—$62.09 million for the P4.37-billion Chico River Pump Irrigation Project and $211.2-million for the P12.2-billion New Centennial Water Source-Kaliwa Dam.

China had also provided a 397 million renminbi or $63.13-million grant to build the P4.61-billion Binondo-Intramuros and P1.37-billion Estrella-Pantaleon bridges crossing Pasig River.

For these four projects, Dominguez said the Philippine government has already “made a lot of progress.”