Monday, 30 March 2009

Philippines eyeing $300M additional funds for railway project

North Railways needs $300m to get moving
Joyce Pangco Pañares

The National Economic and Development Authority is looking at increasing by $300 million the funding for the North Luzon Railways Corp. to pay the Chinese contractor that is building the rail project and end a year-long halt in operations.

Northrail president Edgardo Pamintuan said the approval of the Neda Board is “crucial” as the contractor, the China National Machinery and Equipment Corp. Group (CNMEG), has put on hold the resumption of the construction pending an increase in the project ceiling.

“Northrail will be happy if the Neda Board approves its application for an increased project ceiling because the project can now be implemented and completed at realistic current day prices. We were informed that the Neda Board will discuss it on Tuesday and that it is for their approval already,” Pamintuan said.

“The Chinese contractor and its Filipino contractors are waiting for the approval before they fully deploy their resources on the project. That is how important the Neda Board approval is,” he added.

Pamintuan said the fresh funding, which will complete the $503-million first phase of the project, will cover inflationary costs, foreign exchange differences, and variations in the original scope of work.

The amount being asked by Northrail Corp. is almost the same as the $299 million being demanded by CNMEG but Pamintuan insisted that the figure was reached after the agency did due diligence on the cost adjustments.

In February last year, CNMEG unilaterally suspended work on the Northrail project that will connect Caloocan City to Malolos City in Bulacan and demanded an additional $299 million in the contract price.

Of the additional $299 million, almost two-thirds or $211 million was to cover foreign exchange losses, inflation and costs of the delay in construction while the remaining $88.63 million was due to variations in the original scope of work.

Previously, CNMEG also blamed the government for the construction delays, citing the slow relocation of the illegal settlers whose houses will be covered by the project.

Pamintuan said at least 18,000 families are still living along the Caloocan-Malolos-Clark route who have yet to be relocated.

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