MANILA, Philippines - The Department of Finance (DOF) has successfully renegotiated with the Chinese government the payment terms of a portion of a $500-million loan to be used supposedly to finance the controversial North Luzon Railways Corp. (North Rail) project.
This was made on the back of months of growing tensions with China over territorial disputes in the West Philippine Sea (South China Sea).
The Philippine government was due to pay the Export-Import Bank of China (ChinaExim Bank) this year a lump sum of $184 million, but DOF officials were able to lengthen the payment period to two years or up to 2014.
“We will be paying the amount in four tranches,” Finance Secretary Cesar Purisima told The STAR.
A DOF team met with ChinaExim Bank officials in June to renegotiate the payment terms.
Data from the DOF showed that instead of a lump sum payment of $184 million, the government will pay ChinaExim four equal payments of $46 million over two years starting this month.
The amount represents preparation costs for the project such as right-of-way costs and other land acquisition expenses.
The North Rail project is meant to decongest Metro Manila by providing a fast, efficient and reliable mass transport service for people and goods between Metro Manila and Central and North Luzon.
The project, derailed for many years now, has four phases. The first involves the reconstruction of the existing 32.2-kilometer single-track line into a double track using the Philippine National Railways (PNR) line from Caloocan City to Bulacan, according to documents from the National Economic and Development Authority (NEDA).
As of late last year, the Department of Transportation and Communications (DOTC), then headed by Secretary Manuel Roxas II was doing revisions to the North Rail project.
The controversial project was planned during the Arroyo government but it was ordered shelved by the Aquino administration because of irregularities.
Last year, the Office of the President said the government will revise the project but will carry some elements of the original North Rail design.