State-run Philippine National Railways cancelled a P921-million contract with CRRC Zhuzhou Locomotive Co. Ltd. of China to acquire new trains after the Commission on Audit questioned the procurement process conducted by the state railway company.
“The PNR board decided to cancel the contract. We are in cancellation proceedings with CRRC Zhuzhou,” PNG general manager Junn Magno said in a virtual briefing.
“We will rebid the project. We are in the pre-procurement process,” he said.
Magno did not provide details about the rebidding of the project.
The COA, in its 2019 audit report of PNR, questioned the procurement of train sets (standard gauge diesel multiple unit) amounting to P921 million from CRRC Zhuzhou.
The report said CCR Zhuzhou failed to submit post-qualification bidding requirements, which should have disqualified it from winning the bid.
CRRC Zhuzhou was declared the winning project bidder on Oct. 23, 2019 for the delivery of standard gauge DMU trains to the PNR.
The project consists of three train sets of three-car formations. These train sets, which were supposed to arrive in June 2021, would be initially deployed for long-haul service from Calamba, Laguna to Naga City in Camarines Sur and eventually to Legazpi City in Albay.
The DMU trains will feature business class, first-class and second class accommodations. The trains can accommodate 168 passengers with 36 seats for business class, 52 seats for first class and 80 seats for second class.
PNR used to cover 479 kilometers of tracks from Manila to Bicol until it stopped operation in 2014 because of the right-of-way issues and lack of trains.
The PNR’s metro line runs from Tutuban in Manila to Los Baños, Laguna.
Aside from the P921-million contract with CRRC Zhuzhou, COA also questioned the P44.5-million contract for the retrofitting of piers and abutments of various bridges (Naga Division); P40 million procurement of Computerized Maintenance Management System; and the P31 million supply and delivery of rail wood sleepers.
China is becoming one of the largest sources of official development assistance loans in the Philippines, particularly for the development of “Build, Build, Build” infrastructure projects of the Duterte administration.
China agreed to fund several railway projects in the Philippines, including the Mindanao Railway project. Projects funded by ODA are usually built by contractors from the country that provided the loans.
The Philippines and China signed last month a contract to fund the construction of the $940-million, 71-kilometer Subic-Clark freight line. The railway represents the biggest Chinese government-funded project in the country.