China may invest in Southrail project

HONG KONG – President Arroyo said the Chinese government has indicated willingness to invest in the Southrail project that would run from Caloocan City to Calamba in Laguna.

"It was mentioned by (Chinese) Premier Wen Jiabao. He talked about it. I thanked him very much for the fact that at last we have started construction of Section 1 of North Rail," Mrs. Arroyo said.

China has extended a $400-million concessional loan package for the Northrail project, which will connect Metro Manila to Clark in Pampanga. Last June, Chinese Commerce Minister Bo Xilai visited the Philippines and committed funding for the Southrail project.

An agreement was earlier signed in Nanning, China on the financing of and the speedy implementation of Section 2 of the Northrail.

The Bulacan-Pampanga section of the Northrail project has been endorsed by the National Economic and Development Authority (NEDA).

The project is a 48-kilometer double narrow-gauged rail track plying the towns of Malolos and Calumpit in Bulacan, and Apalit, Minalin, Sto. Tomas, San Fernando, Angeles and Clarkfield in Pampanga.

The railroad project includes civil and track works, signaling, communications and ticketing systems, procurement of rolling stock and right-of-way acquisition.

NEDA said 83 percent of the entire $673.66 million project will be financed through official development assistance (ODA) under the Chinese concessional loan, while the rest will come from local and foreign commercial loans.

"So we will work for the simultaneous construction on the two sections, not sequential. In the meantime, he did mention Southrail but the status of that is it’s at the beginning stage where negotiations are taking place on the loan package. So it’s where Northrail was a long time ago," the President said.

"But we have to start somewhere so that we can get somewhere though. There are discussions with the loan agencies and with Premier Wen Jiabao mentioning it on his own initiative, we have very good prospects about it. Not only Southrail but also housing," Mrs. Arroyo said.

She said these were the next prospects for official development assistance from China.

"The most imminent is the second section of Northrail and then still at the level of initial negotiations, the Southrail and housing," the President said.

Trade Secretary Peter Favila said they informed the Chinese the Philippines would want to finish Northrail first but were elated that China mentioned Southrail already.

"We cannot have too much on the plate because we’re raising expectations and that is where especially the economic team is very, very conscious about," he said.

"When we make statements, when we make announcements we want to make sure that the following day people would already account for it as if it was that easy. So it is nice to hear from the Chinese leadership that they will continue to support Philippines’ request for China to continue with their investments in the Philippines, granting of ODA," he said.

In fact, Favila said they are working on a combination of not just soft loans but equity as well.

On Southrail, he said a study had to be done by the proponents.

"Southrail is just a rehabilitation, I think even relocation of informal settlers would not be as tedious as it was in the Northrail," he said.

Asked whether the Chinese were satisfied with the pace of the work at Northrail, Favila admitted the delay was a concern.

"But now that they started 10 days ago," he said.

But he added the Chinese were not "necessarily waiting for the outcome of the Northrail project" before they would start funding the Southrail. – With Ma. Elisa Osorio