Joyce Pangco Pañares
The National Economic and Development Authority board yesterday approved a supplemental budget of $317 million for the North Luzon Railways Corp., $17 million more than what the company had requested.
Northrail would use the extra budget to pay the Chinese contractor building the rail project and end a year-long halt in operations.
“This will answer for foreign exchange rate adjustments, inflation, and necessary variation orders required by project site conditions,” Northrail president Edgardo Pamintuan said in a statement.
Pamintuan said the Northrail project could either tap funds from local sources or borrow from the China Export-Import Bank or other favorable partners.
“If China is willing to lend at 3 percent [interest], it’s still manageable so it’s okay,” Pamintuan said in a separate interview.
Northrail contractor Sinomach (previously known as China National Machinery and Equipment Corp. Group) has already been informed of the budget approval, Pamintuan said.
Pamintuan said the fresh funds would also allow Northrail to immediately begin building the Malolos-to-Clark portion of the railway.
The company will attempt to complete all of the civil and track works from Caloocan to Clark on or before June 2010.
It will come as the single biggest pump-priming project given the host of industries that will benefit from it, Pamintuan said. “Instead of going on work slowdowns or temporary shutdowns, the Philippine steel, cement, and quarry industries will be loaded with work and will be hard-pressed to meet the demands of the entire Northrail project. This is the type of economic pump-priming that the President is implementing to beat the odds presented by the global recession.”
The amount approved by the Neda board is about 5 percent more than the $299 million being demanded by Sinomach.
In February last year, Sinomach 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.
Sinomach also blamed the government for the construction delays, citing the slow relocation of the illegal settlers whose houses will be covered by the project.
Thursday, 2 April 2009
Joyce Pangco Pañares