CEBU, Philippines — The World Bank (WB) has extended the closing date of the Cebu Bus Rapid Transit project (CBRTP) loan to three more months – or until September 30 – to give way for the government to ask for loan restructuring.
Extending the closing date of the country’s loan for the project is needed to give the Department of Transportation (DOTr) ample time to submit a request for the restructuring of the project which would include the necessary changes, according to a disclosable restructuring paper uploaded on the World Bank’s website.
“Upon receiving such request, the project could be duly restructured to facilitate completion of activities under the current scope/design agreed during the MTR and thereby satisfactorily achieve the Project Development Objective,” read the report authored by Sri Kumar Tadimalla.
Based on the WB’s project details, the Cebu BRT’s total project cost is $228.50 million with $116 million of it committed by the former.
The remaining amount would be taken from the Clean Technology Fund grant and the Agence Française de Développement (AFD) plus a counterpart from the Philippine government.
This took effect at the end of 2014.
So far, 17 percent of the $141 million total loan commitment from the WB via the International Bank for Reconstruction and Development (IBRD) and CTF had already been disbursed.
The Loan Agreements for the CBRTP became effective last December 3, 2014, and were restructured last June 3, 2021, to extend the project closing date by two years, from June 30, 2021, to June 30, 2023, and recently extended to three more months.
Project rating
In the latest document posted by WB, the implementation progress rating is “moderately satisfactory” but the progress towards achievement of the Project Development Objective has been considered “moderately unsatisfactory.”
The project, however, is said to be compliant with the financial covenants and is up to date in the submission of the Interim Financial Reports and Annual Audited Project Financial Statements.
It was, however, noted that a substantial portion of the project activities will not be completed by the closing dates of the support from AFD (March 31, 2023) and CTF and WB (June 30, 2023).
The WB and AFD then informed the government that a request for a second extension could be considered for the completion of the activities as per the current scope/design as agreed and since the Mid-Term Review (MTR) subject to the development and request for extension and restructuring of the loan agreements.
Extension sought til 2025
The Department of Finance requested only an extension of the closing date of the IBRD and CTF loans supporting the project to December 31, 2025, and informed that the project restructuring will be subject to the review and approval of the ICC depending on the DOTr’s compliance, within three to four months of the remaining requirement for the said restructuring request.
Restructuring and revisions are necessary because of some updates on the Cebu BRT infrastructure and system’s concept design.
Based on the update, it will now include support for 12.16 km of trunk services (traversing from IT Park to Mambaling to South Road Properties), 28.8 km of feeder services (southwest to Talisay, a neighboring city, via two routes and northeast from Cebu City to Talamban) and 1.2 km. of urban realm improvement.
Such entails converting the Bulacao to Mambaling section from segregated to mixed traffic; and Ayala to IT Park section into a segregated section.
P7B increase in cost
These changes have resulted in lower levels of estimated ridership and savings in annual GHG emissions; and a rise in the estimated total project cost since appraisal in 2013, from P9.9 billion to P17 billion.
The increase is mainly due to increase in the costs related to, among other things, Land Acquisition and Resettlement (from P1.5 billion to P6.1 billion), Project Management (from P266 million to P1 billion), and BRT infrastructure and system (from P5.5 billion to P6.1 billion).
“In view of this, many components/activities also now need to be jointly financed, and hence, corresponding changes are required in the percentage of financing by the respective development partners.”
At the moment, construction work is now proceeding to the Abellana National School and Cebu Normal University area and Capitol area on the other end of package 1.
The country’s chief executive wants the construction under package 1 to be done by its contractor the Hunan Road and Bridge Construction Group Co. in December this year “as a gift to the Cebuanos.” – GAN (FREEMAN)