Robredo warns of debt trap over revival of Bicol Express

October 26, 2017

 

By Juan Escandor Jr.

NAGA CITY---Vice President Leni Robredo has raised the debt-trap alarm over the revival of the Bicol Express train with the P175B fund to be loaned from China with 2 percent interest rate per annum in 20 years.

Robredo said she is worried because the P175B loan is huge and the Philippine might experience a debt trap like what happened to Sri Lanka.

She said she got the impression that the government is not looking at other alternatives like Private Public Partnership (PPP) because she worries that problems may arise after the decision had been done.

Robredo recalled she filed House Bill 3421 in 2013 with two components---extending the corporate life of the Philippine National Railways for another 50 years and increasing its capital stock at P100B.

She said during the deliberation at the committee level she agreed to separate the capitalization of the PNR because the extension of the corporate life of the PNR was immediate because it will expire in that year.

Robredo said on June 19, 2014, then President Benigno Aquino III signed Republic Act 10638 that extended the corporate life of the PNR for another 50 years.

She said after her term as representative in Congress, she asked her successor Camarines Sur third district Rep. Gabriel Bordado Jr. to refile the bill for PNR capitalization which was increased to P500B.

Robredo said in Feb. 2015, the National Economic Development Administration (Neda) approved P171B for the PNR through PPP where there were three interested bidders which she failed to name.

But she said the bidding was stopped because it was noticed that the gauge that will be used in the railways was not the international standard.

Robredo said the study to change the design appropriate for the international standard gauge of the railways delayed the bidding of the project but the amount of P171B was already set aside for the PNR.

“In fact, the DOTC (Department of Transportation and Communications) at that time presented, after the Neda approval, the groundbreaking date that was scheduled in December 2017 and the end of the project in 2022, which was the timeline,” she said.

Robredo said the continuity of the original proposal of rehabilitating the PNR through PPP at P171B was interrupted by the 2016 elections.


However, she said, a budget of P800M for PNR had been approved in 2016 even though most of the allocations were intended for the improvement of train stations and nothing for the repair of the railways.

“The former DOTC proposed P7B for 2017 which was included in the General Appropriation Act. But with the change of the administration, the policy changed from PPP to ODA,” Robredo said.

She said if the project implementation of the PNR is done through PPP it will be more efficient and the government will incur no debt.

Cesar Chavez, DOTr undersecretary for rails, said the national government has opted to implement the PNR project through ODA because there were no takers from the private sector.

Chavez said the reason why there were no private takers and the PPP strategy is not possible this time because the line from Los Baños to Bicol is not profitable with only 11,000 ridership based on the study conducted which was validated by the Asian Development Bank.

“There’s no private sector interested to construct the railways going to Bicol. The private sector would like to participate in the construction of railways from Calamba to Manila,” he said.


Chavez added that it is because the passengers from Manila to Calamba are from 350,000-400,000 daily.  

He argued that the PPP is not purely private sector in actual implementation because the private sector asks the government counterpart like the right-of-way acquisition, land acquisition and resettlement.

“We are not saying we don’t want PPP. What we are saying, based on our study, there are no takers in the line from Los Baños going to Bicol. San Miguel Corp., Ayala Metro Pacific and DMCI are not interested,” Chavez said.

He said there is no private sector interested because it is a losing investment so that the government has to enter into agreement with other government through ODA.

Chavez said he is not an advocate of ODA alone but hybrid of government exposure, ODA and PPP.

“I am not saying that China is the best formula for ODA. What I am saying is in the absence of any other country willing to fund our Bicol Express, China is welcomed. Even Japan won’t commit to fund. South Korea wants to fund only if the government shoulders 40 percent of the project,” he said.

He vowed to ensure that through the ODA with China, the Philippines will not fall into the debt trap.


 

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