P157-B Japan loans keep PH rail project on track

Finance Secretary Benjamin Diokno

The Philippine and Japanese governments have signed two more loan agreements totaling 377 billion yen, or about P157 billion, to finance two sections of the ongoing North-South Commuter Railway (NSCR) project.

Finance Secretary Benjamin Diokno, who was part of the delegation accompanying President Marcos in his visit to Japan this week, signed the loan agreements with the Japan International Cooperation Agency (Jica) on Thursday on behalf of the government.

Jica is the world’s biggest bilateral aid agency, with a presence in over 150 countries and regions and has about 90 overseas offices.

In a meeting with the President on Friday in Tokyo, Jica president Akihiko Tanaka assured Mr. Marcos of the Japanese aid agency’s continued support to the socioeconomic development of the Philippines under his administration.

The President said Japan was a top partner in “many of these important undertakings.”

“On behalf of my family, on behalf of my countrymen, we would like to thank you and we look forward to a continuing partnership in the future. Of course, the transfer of technologies can help our countries … and this brings us to a new area of partnership,” he said.

The yen loans include one worth 270 billion yen, or about P112 billion at current exchange rates, for the second-tranche funding for the NSCR portion that spans the 51.2-kilometer commuter rail line between Malolos in Bulacan province and Clark International Airport in Pampanga province.

A supplemental loan of 107 billion yen (about P45 billion) was for the rail link between Malolos and Tutuban in Tondo, Manila.

The Malolos-Clark line, also called “NSCR PNR Clark-Phase 2,” was touted as one of flagship projects of the Philippine government under the Duterte administration’s “Build, Build, Build” infrastructure program.

The Malolos-Clark segment—one of three parts of the 163-km Clark-Calamba NSCR project—was earlier funded through a $2.95-billion (about P161 billion) loan from the Asian Development Bank (ADB), which was approved in May 2019.

Back then, ADB said the Malolos-Clark Railway represented the Japan-led multilateral lender’s single-biggest project financing not only in the Philippines but in Asia.

According to Jica, the Malolos-Tutuban segment, the first component of the NSCR project, is intended to strengthen the transportation network and decongest the national capital, “thereby contributing to the expansion of Metro Manila’s economic sphere and the alleviation of air pollution.”

For the Malolos-Tutuban project, contracts for consulting services were awarded in February 2018 and procurement contracts were awarded in May 2018.Regarding the third component, the Solis-Calamba line, ADB approved in June 2022 funding of up to $4.3 billion (about P234 billion) to help finance the construction of nearly 55 km of a modern suburban railway line.

By then, ADB said this would be its largest infrastructure financing in the Asia-Pacific region.

The NSCR, from Clark to Calamba, is part of a larger plan of developing the Philippines’ railway infrastructure.

Renegotiation

The entire NSCR system would cost P777 billion.

Officials broke ground for the project in ceremonies in September 2021.

In July 2022, Undersecretary for Railways Cesar Chavez of the Department of Transportation (DOTr) said that Chinese loans for three railway projects that were to be among the major legacies of Duterte had been scrapped as his administration bowed out, and that Mr. Marcos was looking at renegotiating the loans with Beijing in hopes of securing official development assistance loans as the government had no money to fund these projects.

Manila’s loan applications with state-owned China Eximbank for three big-ticket railways were deemed withdrawn after former Finance Secretary Carlos Dominguez III “canceled the application instead of keeping it in suspended animation” due to the bank’s inaction, Chavez said.

The financing was for contracts, which were already awarded, and covered the first package of the Philippine National Railways (PNR) Bicol project, the Subic-Clark Railway Project (SCRP) and the first phase of the Mindanao Railway Project (MRP).

The Chinese government had not approved the loan applications that were submitted by the Philippine government in 2021-2022, Chavez said.

First package

The first package of the P142-billion PNR Bicol project will link Calamba to Daraga in Albay province via a 380-km railway. This will cover the design, construction and electromechanical works of the project.

The P50-billion SCRP is a 71.13-km link between Subic Bay Freeport Zone and Clark Freeport Zone and would transport both freight and passengers.

The P83-billion MRP’s first phase covers the 102-km Tagum-Davao-Digos route. It was envisioned to be the first rail line across Mindanao and was expected to be completed by 2024-2025, and would reduce travel time to about an hour from 3.5 hours currently.

—WITH A REPORT FROM INQUIRER RESEARCH

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