New NorthRail to cost over $1 billion

By Cai U. Ordinario, BusinessMirror

Posted at Aug 23 2014 09:15 AM | Updated as of Aug 23 2014 05:15 PM

MANILA - The government is embarking on a new rail project that is set to replace the scrapped Northern Luzon Railway (NorthRail) line. The new NorthRail is estimated to cost over $1 billion to complete.

The North-South Commuter Line will be implemented in three phases. The project details for the first phase, which will run from Malolos, Bulacan, to Tutuban station in Divisoria, have already been submitted to the Investment Coordination Committee (ICC) Cabinet Committee (Cabcom) level.

The details for the last two phases, the Tutuban-to-Calamba, Laguna, phase and the Malolos-to-Clark in Pampanga phase, have yet to be submitted to and evaluated by the ICC.

“What is coming to the ICC is the North-South Commuter Line, which will be [undertaken] through PNR [Philippine National Railways],” National Economic and Development Authority [Neda] Deputy Director General for Investment Programming Rolando G. Tungpalan told the BusinessMirror on Friday. “It will be high-speed, it will not be a bullet train, but will be a high-speed electric train.”

Industry sources revealed that the funding for the first phase will likely be sourced from the Japanese government. The last two phases, on the other hand, may be funded via the public-private partnership scheme.

However, at this point, Tungpalan could not confirm the information obtained by the BusinessMirror because financing for the project has yet to be finalized. He said this is based on the revised financing framework of the government on projects that go through the ICC.

The NorthRail project was initially funded through a $500-million loan from the Chinese government. Only a portion of this loan was used for the actual construction of the project.

However, the Supreme Court declared the project anomalous and forced the Aquino administration to terminate the project in 2012.

NorthRail vs North-South Commuter Line

While the North-South Commuter Line shares some of the alignment in the botched NorthRail project, the project is considered a new one.

Based on the 2012 Official Development Assistance Portfolio Review, the contract for the NorthRail Project Phase 1 Section 1 funded by the China Eximbank was “terminated prior to loan closing.”

The government, however, continues to pay for the used amount of the total loan, as well as other charges linked to the premature termination of the contract.

Further, the Neda report stated that the project is a “subject of arbitration” and that a new express rail project to connect Metro Manila and Clark International Airport will be implemented in its place.

Industry sources said the new North-South Commuter Line was created to serve this purpose.

Apart from these, the NorthRail Project is managed by the North Luzon Railways Corp., a subsidiary of the Bases Conversion and Development Authority.

The North-South Commuter Line, on the other hand, will be managed by the PNR. This was not initially a viable option in the NorthRail project because the PNR’s charter was only recently extended to 2064.