Northrail project desirable, but current contract problematic – Roxas

A September 5, 2011 press release from the Department of Transportation and Communications

Transport Secretary pledges project reconfiguration under Aquino government

Fresh from his China trip with President Benigno S. Aquino III, Transportation and Communications Secretary Mar Roxas today briefed DOTC staff on the significant agreements and potential joint infrastructure and services projects the team discussed with the Chinese government. These projects, he said, are expected to further improve local transportation and communication systems, which will propel future national economic growth.

“I’m elated to report that our recent China trip was a success in setting forth our position on various matters, and more importantly, in discussing possible collaborations with both public and private entities in China,” Roxas said in his opening speech during his staff’s monthly flag raising ceremony.

Roxas said the projects are in line with President Aquino’s 5 Rs policy—“Right project, Right quality, Right people, Right cost and Right on time.”

 Roxas enumerated at least three important road and rail network infrastructure and transportation projects in which the Chinese leadership expressed interest in taking part.

First on the list is the NorthRail project, which Roxas said had been discussed among top Chinese leadership.

“The [NorthRail] project is highly desirable but the present contract is problematic.  This is the reason why a ‘reconfiguration’ of the project is being discussed. We are opening talks to prevent the project from being stalled,” Roxas said.

“We are looking forward to the success of the talks so that the project can be reconfigured such that it satisfies Philippine procurement laws, proper [contract] bidding is undertaken and correct payment scheme is agreed with suppliers. This will take a lot of time but at least the condition has been set now,” Roxas said.

The second project that Roxas said received favorable response from Chinese officials is the China-Philippine Nautical Highway project where roll-on-roll-off (RORO) facilities will be established between Guangdong Province [southern part of China] and either Subic or the Batangas port.

Guangdong is the manufacturing base of China where global leading technology companies, including Intel and IBM, have set up factories. Over the years, labor cost in China has gone up and multinational companies started looking elsewhere to base their manufacturing operations.

“The [labor] situation in China had tremendously changed over the last two decades. Their labor cost is now relatively expensive as such that they now face labor supply problems,” Roxas said. “This presents a good opportunity for us particularly to claim the position of being the manufacturing base in the region.”

Under the RORO cooperation, local raw materials and semi-finished industrial goods will be loaded on containers and transported via the RORO between Guangdong and two local ports.

The last project highlighted by Roxas in his speech was the local Central Spine Nautical highway project, which involves the construction and operation of an integrated transportation system combining RORO ferry port network and services with connecting new toll roads linking Manila-Panay-Negros-Cebu-Bohol-Northern Mindanao.

Roxas said the Chinese leadership expressed openness in further extending the available credit lines to the country. “If we can determine the cost of this project, funding companies like JICA, World Bank and China will have an idea how much they can finance the project,” said Roxas.