Three major Philippine rail projects have stagnated after China “withdrew” its agreement with former President Rodrigo Duterte, according to Philippine officials.
Undersecretary of Transport Cesar Chavez said China is now considered a “withdrawal” because it did not respond to Manila’s loan application for three rail projects submitted last year.
He said the Philippine Transport Bureau informed China Exim Bank in May that the loan application would be automatically withdrawn if the bank did not approve it by May 31.
“Former Treasury Secretary Sony Dominges told reporters that he canceled the application rather than leaving it in a paused animation,” Chavez told reporters, according to state management. Philippine News Agency.
“In a text message to me this morning, former Under Secretary of Finance Sonny Dominguez said he canceled the application instead of leaving it in the paused animation,” Chavez said. “DOTr understands this [the cancelation] In light of the future transition of the government, I pay tribute to the next administration. “
The projects include the Philippine National Railways Bicol Project (PNR Bicol) worth 142 billion pesos (about $ 2.5 billion), the Mindanao Railway of 83 billion pesos (about $ 1.47 billion), and 51 billion pesos (about $ 906 million). Includes Subic Clark Railroad.
The National Economic and Development Authority initially approved three projects funded by Chinese financing under the Duterte administration, following negotiations with the Chinese administration in 2018.
Mr. Charves said Beijing also did not submit a candidate list of contractors for the Mindanao railway project. This is a requirement for advancing loan contracts.
“In short, China has withdrawn,” he said.
China wants 3% interest
Duterte’s successor, Ferdinand Marcos Jr., has instructed his administration to renegotiate a loan agreement with China to resume the project. Marcos became president of the Philippines on June 30, after Duterte finished his presidency.
“The new administration can revisit the project,” Treasury Secretary Benjamin Diacono told reporters Friday. “If it is determined to be worth it, we may choose to resume the loan application if the funds are still available,” it is reported. Inquirer.net..
However, former Treasury Secretary Carlos Domínguez III told Chavez that China would demand interest of up to 3% on loans to finance railway projects.
“If you want to pursue this [the loans]I understand that Chinese financial institutions demand interest rates above 3 percent, “Dominges wrote in a text message to the local press, Chavez. Phil Star report.
Chavez said the Marcos administration would also consider pursuing a public-private partnership scheme to fund projects, especially the Subic Clark and Mindanao railway projects.
These projects are part of Duterte’s “Build, Build, Build” infrastructure program, are central to his economic strategy, and include 75 major projects, about half of which are financed and subsidized by China. Assigned to gold, or investment.
When Duterte visited Beijing in 2016, he signed a $ 24 billion agreement on China’s lending and investment pledge for infrastructure overhaul, but realized only a small portion of China’s pledged support. I have not.
Reuters contributed to this report.