THE Bases Conversion and Development Authority may dissolve the North Luzon Railway Corp. as soon as Hong Kong arbitration case with Chinese contractor China National Machinery and Equipment Corp. is settled, the agency’s head said Thursday.
Newly-appointed BCDA president Vivencio Dizon said the BCDA subsidiary has done nothing to benefit the agency and has in fact been a losing proposition for the agency.
“We cannot move unless the arbitration case is completed. I have authorized a due diligence on the company as well as financial audit with the end view in the near future to dissolve the company,” he told reporters in a year-end briefing in Makati City.
In the arbitration case pending in Hong Kong, China National Machinery asked for $316 million in compensation after then President Benigno Aquino nullified the contract midstream.
The Hong Kong arbitration court ruled the case in favor of the Chinese company asking the Philippine government to pay $216 million as compensation for the unfinished contract.
BCDA has so far paid $210 million, the arbitration is over the remaining $106 million claimed by the Chinese state firm.
On the other hand, the BCDA also filed a counter claim of $200 million for the inability of the Chinese company to deliver the project based on the agreed timeline.
Dizon said the agency is still looking at the legal implications of the case and its impact on the project. BCDA is always in constant communication with the Office of the Government Corporate Counsel for new developments on the case and how to deal with the arbitration.
“The most important thing now is to make this project happen. This is the priority of the new government. We want financial closure on this project that we’ve inherited,” said Dizon.
The Northrail project is fully under the leadership of the Transportation Department with support from the Bases Agency.
The Transportation Department will undertake the Tutuban to Malolos phase of the rail project as well as the second phase from Malolos to Clark.
The Japan Overseas Infrastructure Investment Corp. for Transportation and Urban Development has offered to conduct the feasibility study for the Malolos to Clark segment.
Russia and China also signified interest to undertake the feasibility study for the Malolos to Clark phase.