JAPAN has pledged to the Philippines its biggest official development assistance package worth 240 billion yen (or $2 billion) for the construction of the shelved Northrail project that was once awarded to a Chinese state construction firm.
Foreign Affairs Secretary Albert del Rosario said the Japanese ODA package is intended for Phase One of the North-South Commuter Rail which will replace the Northrail project that was scrapped over legal issues.
The Northrail project was meant to build a rail line to Clark Air Base in Pampanga and was awarded to China National Machinery and Industry Corp. in 2003 for an initial $431 million, with China EximBank signing a loan agreement in 2004 to finance $400 million.
The government has already paid a total of $180 million on top of the $50 million outstanding loan, or P9 billion.
But the Supreme Court ruled that the project was not a government-to-government agreement and was therefore invalid because there was no competitive bidding as the law requires.
When the government informed Sinomach of its inability to carry out the agreement, China EximBank declared a default.
The incident led President Benigno Aquino III to say during a trip to Japan last June that the financial squeeze was part of China’s strategy in asserting its maritime claims in the South China Sea.
“We are unfortunately also possessor of an experience wherein there was a concessional loan which was neither concessional nor helpful to our country,” Aquino said during the Nikkei Conference on the Future of Asia in Tokyo.
The Philippines’ experience with that particular project has led Manila to be “very very cautious” about becoming a member of China’s Asia Infrastructure Investment Bank, he said.
The Philippines is concerned that “the economic help that is supposed to be afforded will not be subjected to vagaries of politics.”
“The only thing we can show for the hundred of millions of dollars that we had to pay immediately was about a kilometer of columns and the plans for this project. So that behooves us to be very, very cautious whether or not to join the AIIB,” Aquino added.
But in his meeting with Japan State Minister for Foreign Affairs Minoru Kiuchi at the sidelines of the ASEAN Ministerial and Related Meetings in Kuala Lumpur, Malaysia, Del Rosario the ODA pledge was part of “quality infrastructure” pacts forged during Aquino III’s state visit to Japan.
The North-South Commuter Line will be implemented in three phases. The first phase, which will run from Malolos, Bulacan, to Tutuban station in Divisoria, will be funded by Japan while the two other phases will be funded through public-private partnerships.
But the details for the last two phases, the Tutuban-to-Calamba, Laguna, phase and the Malolos-to-Clark in Pampanga phase, have yet to be evaluated.
Del Rosario said they also discussed initiatives for closer security cooperation, including the acceleration of discussion for an agreement on the transfer of defense equipment and technology.
The North-South Commuter Rail (NSCR) Project, Phase 1 is the single-biggest ODA yen loan package (US$2 billion) to date that Japan has given any development partner.
The NSCR, which the Department of Transportation and Communication (DOTC) will implement, involves the construction of a 36.7-kilometer narrow-gauge elevated commuter railway from Malolos to Tutuban. – With Sandy Araneta
