UPDATED MANILA, Philippines — The Department of Transportation (DOTr) said Friday that the government could complete the Mindanao Rail Project by 2028 if the loan for the project is finalized by the middle of next year.
During a hearing before a Senate finance subcommittee on the agency’s proposed 167.12 billion peso budget for DOTr in 2023, its transportation undersecretary for planning Timothy Batan said loan applications for three Chinese-funded projects, including the Mindanao Railway, were withdrawn last June. due to the Chinese government’s inaction on the funding request.
“[It] was a condition imposed by the former Department of Finance (DOF) that if loans will not be closed or signed by the end of the previous administration, we will withdraw our loan applications,” explained Battan.
He also said that the DOTr had recently written to the DOF to inquire about the possibility of resubmitting applications for these loans. Batan also revealed that the department expects to secure the Chinese loan next year.
“The current program involves an assumption that we will get our Chinese loan by the middle of 2023, and if that assumption of our current program is realized, then our target is to be completed in 2028,” he said. declared.
Batan later added that this goal also depends on several other assumptions, including their ocular completion for acquisition of grip and construction of specific segments, among others.
But Senator Nancy Binay argued that the DOTr should “manage everybody’s expectations,” especially since the loan application hasn’t even been resubmitted yet.
Batan said the DOTr would take note, but also pointed out that the agency has since obtained investment approvals, which means the project is not entirely in limbo as other activities such as l acquisition of the right-of-way are already in progress despite the pending loan. .
Asked why the Philippines is still seeking a loan from China instead of going to another source of funding like the Japan International Cooperation Agency (Jica), Batan said the spread between the rates interest offered by Jica and the Chinese bank Exim is “not very far off”. .”
According to him, Jica’s interest rate of 0.1% per annum is a loan denominated in Japanese yen, while the interest rate of 2% per annum by China Exim Bank is a loan denominated in US dollars. .
“For each of our bilateral partners, there is a lending limit that our bilateral partners are limited to, and currently their lending limit in the Philippines is already almost exhausted,” he also noted.
Completing a Mindanao railway system was among former President Rodrigo Duterte’s notable promises when he campaigned in the 2016 national elections.
Following in the footsteps of his predecessor, President Ferdinand Marcos Jr. also pledged to support the construction of the project, noting that it would enhance economic development in the region.
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