Non-payment of North Rail loan to affect PH credit status - Purisima
MANILA, Philippines - The loan agreement for the controversial North Luzon Railways Corp. (North Rail) project is a separate and distinct arrangement from the supply contract and that the Department of Finance is committed to honor the loan deal, Finance Secretary Cesar Purisima told The STAR yesterday.
He said non-payment of the North Rail loan or any other government loan would have adverse impact on the country’s credit status.
As such, the government, through the finance department is committed to pay the Export-Import Bank of China (ChinaExim Bank) the $185 million, which represents the disbursed amount out of the total ChinaExim loan of $500 million.
The Finance department has successfully negotiated with ChinaExim banks officials the payment of the disbursed amount in four tranches instead of lump sum amount, with the first tranche paid on Sept. 21.
The government is scheduled to pay the second installment in March 2013, data from the Finance department showed or every six months from September 2012 to September 2014.
“We are committed to pay the disbursed amount of $185.15 million to the Eximbank of China including interest due under revised negotiated terms of four equal installments within 2012 and 2014. Currently, we have already paid the principal and interest due on Sept. 21, 2012 amounting to $46.11 million representing first payment,” Purisima said.
He declined to comment on the supply contract between North Rail and the China National Machinery and Equipment Corp. Group (CNMEG), saying that this falls under the jurisdiction of the Department of Transportation and Communications.
CNMEG is the supply contractor for the project. The contractor suspended work in the project in 2008 after it asked North Rail for a bigger contract price.
Non-government groups and private lawyers have brought CNMEG to court for the alleged anomalous supply deal but CNMEG said it was immune from lawsuits in the Philippines because it was an “agent of the Chinese government” as the primary contractor for the project.
Because of the alleged anomalies surrounding the project, the Aquino administration said it was no longer pursuing the Northrail deal.
The North Rail project was intended to achieve the government’s goal of decongesting Metro Manila by providing a fast, efficient and reliable mass transport service for people and goods between Metro Manila and Central and North Luzon.
The project supposedly involved four phases. The first phase involved the reconstruction of the existing 32.2-kilometer single-track line into a double track using the Philippine National Railways line from Caloocan City to Bulacan, according to documents from the National Economic and Development Authority (NEDA).