China-backed loan for Bicol Express to kick start Xi Jinping’s visit

The Department of Transportation (DOTr) is poised to sign a loan deal with China for a massive railway project linking Manila to the Bicol region.

The agreement, which will coincide with Chinese President Xi Jinping’s official visit to the Philippines in November this year, is expected to be the largest loan deal thus far between the two countries ever since the Duterte administration pursued warmer ties with Beijing.

The project is known as the Philippine National Railways South Long Haul, a 581-kilometer standard gauge railway line that spans Manila, Batangas City all the way to Legazpi and Matnog. The project cost is estimated at P151 billion.

Transportation Secretary Arthur Tugade said during the second EJAP Economic Forum on Tuesday the DOTr would soon wrap up bids with accredited contractors.

“We hope the loan agreement will be signed during the visit of President Xi of China this November,” Tugade said. He did not give the specific loan terms.

Timothy John Batan, DOTr undersecretary for rails, explained earlier that China’s loan guidelines required that a contractor first be selected. He said the final loan amount would then be based on the winning bidder’s contract price.

The PNR South Long Haul was previously listed among the Aquino administration’s pipeline of public-private partnership (PPP) projects. Its funding was then shifted to overseas development assistance loans under President Duterte.

The Chinese government is also expected to fund a significant portion of the 1,500-km Mindanao railway project, which will connect Davao, Iligan, Cagayan de Oro, General Santos and Zamboanga.

The first phase of the Mindanao railway project is a P35-billion section that will run about 100-km through Tagum, Davao and Digos. To be initially funded under the General Appropriations Act, the DOTr said last May that China had also offered to fund this section.