China committed to fund Mindanao railway project

MANILA, Philippines — China remains committed to finance construction of the country’s first train system outside Luzon despite upward adjustment in cost, with the long-awaited loan agreement expected to be signed early next year.

“There has been no change in the commitment of China to finance the Mindanao railway,” Transportation Undersecretary for railways Timothy John Batan said.

The Cabinet-level Investment Coordination Committee (ICC) of the National Economic and Development Authority (NEDA) approved on July 10 the increase in project cost for the Mindanao Railway.

The cost for the Mindanao Railway Project Phase 1-Tagum-Davao-Digos segment was increased to P82.9 billion from the previously approved project cost of P35.9 billion in 2017 to cover changes in the cost of structural and construction works that comes with the extended scope.

“When we did the engineering designs during 2018 it is then when we realized, together with our ADB-funded consultants, that the terrain for the alignment was different from what we assumed during the original feasibility study in 2015 to 2017,” Batan said.

Tugade said the loan agreement between the Philippines and China is expected to be in place not later than the second quarter of next year. China is expected to fund 80 to 85 percent of the project.

“Remember for China ODA funded project, it’s procurement first, contract award, then loan agreement signing. With the decision of the ICC last week, we are already sending this week our request for a shortlist. Remember China side will provide the shortlist,” Batan said.

“We will send that request within the week. As soon we receive the shortlist we will release the bidding documents to the three then we award within the year and we do the negotiations for China loan that usually take three to six months. So we’re expecting to award the contract within the year and get the loan agreement in place within the second quarter next year being the latest possible time,” he said.

Batan said start of construction of the first phase may start by the first or second quarter of next year.

“Same with PNR Bicol, no loan agreement yet but the project management consultant is already working.

We’re planning to get that same commitment from the Chinese government so that once the contract is awarded within this year, in parallel with the negotiation for loan agreement, they are already working as well,” he said.

The train system’s configuration would remain with the original plan which is single track and non-electrified so that the project would be able to kick-off immediately, according to Transportation Secretary Arthur Tugade.

The railway project was earlier being envisioned to be a two-track, electric, and standard train system.

The Mindanao railway project in its entirety is will consist of 1,532 circumferential and spur lines that will connect Davao provinces, Iligan, Cagayan De Oro, General Santos City, and Zamboanga.

Phase 1 of the Mindanao railway project, which will cover the Tagum-Davao-Digos segment, is a 102-kilometer rail line that will have eight stations and a depot in Tagum.