The Department of Transportation (DOTr) on Monday bared plans to formally invalidate two rail contracts with China on the basis of Beijing’s continued lack of interest in funding the high-impact infrastructure projects.
The planned contract invalidation comes on the heels of an earlier declaration to terminate the P83 billion Tagum to Digos segment of the Mindanao Rail project that has also since fallen into neglect.
According to Transportation Secretary Jaime Bautista, at the sidelines of the 2023 EJAP Economic Forum on Mondaye, he plans to terminate two existing railway contracts with China before the end of the year.
In January 2022, the DOTr awarded a P142-billion contract to the joint venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co. Ltd. and China Railway Engineering Consulting Group Co. Ltd. to build the first 380 kilometers of the Philippine National Railway Bicol project from Banlic, Calamba to Daraga, Albay.
The agreement covers the design, construction and electromechanical works of the project. PNR Bicol relates to the 565-kilometer railway connecting Metro Manila to the southern Luzon provinces of Sorsogon and Batangas.
The government also had a contract with China Railway for a project management consultancy worth P14 billion.
Of the total P14 billion assistance from China, Bautista said the government has drawn P1.4 billion.
The P51-billion Subic-Clark Railway project, on the other hand, was awarded to China Harbour Engineering Co. in December 2020.
The project is designed to provide high-capacity freight service supporting industrial areas along the Subic-Clark corridor and as link to the airport at Clark Freeport Zone and the seaport at the Subic Bay Freeport Zone.
Bautista said the government has to terminate these contracts because China will no longer finance the two railway projects.
“For the Philippine National Railway Bicol Project we will do it before the end of the year,” he said.
“Since there was no loan the contracts were not valid,” Bautista said.
Earlier, Finance Secretary Benjamin Diokno informed China that the Philippines is no longer inclined to pursue Chinese ODA financing for the Mindanao Railway Project Phase 1 – Tagum-Davao-Digos Segment (MRP-TDDS).
The P83-billion Mindanao Railway Project: Tagum-Davao-Digos segment of the Mindanao Railway, was meant to reduce travel time from Tagum City, Davao del Norte to Digos City, Davao del Sur from 3.5 hours to 1.3 hours when completed.
