Lawmakers say delays in North Rail project can jeopardize RP-China relations

Ranking administration lawmakers warned an ongoing congressional probe into alleged anomalies surrounding the $503-million North Rail project could jeopardize the country’s diplomatic ties with China.

"Destroying the country’s relations with China at this initial stage may prevent the country from strengthening its ties with the Chinese government and will have drastic repercussions in the future," Bacolod City Rep. Monico Puentevella said.

Isabela Rep. Edwin Uy said the Senate should stop the investigation over the contract, claiming the inquiry had become a "forum to smear the Arroyo administration."

Uy pointed out any delay in the project "could send (the) wrong signal" to the Chinese government and to other foreign governments as well which would be discouraged from investing further in the country’s infrastructure projects.

"We urge the President’s critics to be fair in considering the North Rail contract," he said.

Puentevella, meantime, said the project could have started long before were it not for critics alleging the contract was grossly disadvantageous to the government.

"Inaamag na ito. (Mold has grown on the contract). The government has tried implementing this since the Ramos administration and it is only now during the Arroyo administration that it is nearing realization," he said.

Puentevella and Uy said partisan politics was clearly behind the North Rail probe as Senate President Franklin Drilon himself had asked the UP Law Center to study the deal.

"His (Drilon’s) motive in having the contract studied speaks for itself," the lawmakers said.

A study by the UP Law Center claimed the North Rail project contract with China National Machinery and Equipment Corp. (CNMEC) was "unlawful and void" since it had not undergone public bidding.

The study also said the contract could not be viewed as a treaty or executive agreement.

On the economic, financial and technical aspects of the North Rail project, the UP Law Center said CNMEC is not technically qualified to be a prime contractor.

It pointed out that previously, the CNMEC had not undertaken any railway project in China or in any country.

Chinese Ambassador Wu Hongbo recently defended the project, claiming the contract is "aboveboard, just and legal."

Wu had warned critics against dragging the project into their political campaign against President Arroyo.

The Chinese envoy said "there is nothing to hide" in the contract and noted the endless debates over the deal could send a negative message to other Chinese investors and other foreign investors as a whole.

He expressed surprise that the political opposition was "making a fuss" out of the $530-million loan from China for the building of the first modern railway system in the country.

Wu claimed the loan agreement had been scrutinized in detail by the Department of Foreign Affairs (DFA) and the Chinese government last year.

The loan agreement between China and the Philippines will build Phase I of the North Rail project covering the 32.138-km Caloocan-Valenzuela segment with the construction of six stations in Caloocan, Valenzuela, Marilao, Bocaue, Guiguinto and Malolos in Bulacan.

According to estimates, the project would cost at least P882 million per kilometer of a double-track system — not a single track as the opposition had earlier alleged.