RP to offer South Rail project for Chinese funding

Despite a delay in the Chinese-funded $503-million North Rail Transit project, the Philippine government plans to offer the project’s southern counterpart again for funding from the People’s Republic of China.

Philippine economic officials are expected to discuss the funding plans for the P6.6-billion South Commuter Rail project with Chinese Minister of Commerce Bo Xilai who arrived over the weekend to attend the Philippine-China Economic Partnership Forum.

China’s political counsellor to the Philippines Deng Xijun has admitted that the South Rail project has been identified for possible funding but clarified that there is still no commitment from their government, especially since the North Rail project has not even started yet.

North Luzon Railways Corp. (Northrail), a subsidiary of the state-owned Bases Conversion Development Authority (BCDA), held groundbreaking rites for the initial phase of the project – from Caloocan to Malolos, Bulacan – only last April.

The project, when completed, will extend to Bonifacio Global City in Taguig, the Diosdado Macapagal International Airport at the Clark Special Economic Zone (CSEZ) in Pampanga, the Subic Freeport Zone, to the Poro Point Special Economic Zone in San Fernando, La Union.

Out of the total $503 million project cost, $421 million will be funded by the Chinese government through the Export-Import Bank of China under very concessional terms. The terms include 20 years repayment period inclusive of a five-year grace period at three percent interest rate.

The remaining $82 million will be funded by the Philippine government as counterpart fund which would already incorporate expenses for squatter relocation.

The North Rail project has encountered delays due to controversies regarding the bidding of the project and the relocation of squatter communities along the rail route.

On the other hand, the South Rail Project would provide a railway system stretching from Caloocan to Calamba in Laguna, including the south line of the Philippine National Railways (PNR) from Caloocan to Alabang in Muntinlupa under Phase I worth P3.3 billion.

The PNR had originally eyed funding of P2.5 billion or 78 percent of the project from the Korean Export Import Bank (KOEXIM) as foreign cost component, while the remaining P800 million or 22 percent would be shouldered by the government.

The project is seen to enhance the public transportation system in Metro Manila by helping decongest traffic and at the same time make the areas south of Manila more accessible.