This is a re-posted opinion piece.
One of the hot topics that will likely be on the agenda when P-Noy visits China next month is what to do about NorthRail. A major infrastructure project of the Arroyo administration, NorthRail was launched in 2004. The press releases at the time hailed the project as proof of the strong partnership between China and the Philippines. NorthRail has instead become an embarrassing showcase of corruption on both sides of the West Philippine Sea.
CNMEG, the Chinese contractor appointed by the Chinese government to handle the project, demanded an increase in the contract price. Essentially a trading firm, CNMEG is also said to have no prior experience in managing an international infrastructure project of this magnitude. It is only 15 percent complete and its cost has gone up from $1.18 billion to $1.8 billion.
At this point, it seems obvious that the NorthRail contract was tainted with massive corruption. How could they have drawn down so much of the loan and accomplished so little? Some of our politicians reportedly got their share even before the project broke ground. On the Chinese side, its policy of amoral non interference allows corruption in its foreign aid program.
But the Chinese side is not so clean too. Their railway ministry is now under investigation by the Chinese government for corruption. It is suspected that technical problems that have led to serious accidents and loss of lives in recent rail accidents could have been caused by corruption as corners are cut and standards sacrificed. China’s Rail Minister was arrested early this year, stripped of his Communist Party role for massive corruption. China’s state news agency Xinhua described the Rail Minister’s arrest as part of the country’s battle against corruption.
In the most recent rail accident, a Financial Times article reports that they “don’t yet know the reason for the crash. But pushing the system beyond its technical capacity and cutting corners to free up slush money are plausible factors.” A blogger also posted photos of the rail minister’s fancy watch collection, an indication of his less than modest lifestyle,” the FT reported.
It is easy to suspect that corruption also tainted the export of Chinese rail technology. Thus, it should be easy for the Chinese leadership in Beijing to understand where P-Noy is coming from. It is not difficult to see that the NorthRail project had gone wrong. And no Chinese government will want to leave a legacy so tainted with everything that’s wrong, misrepresenting the relationship between our countries. If enough preparatory work is done, the Chinese leadership would have been convinced even before P-Noy gets to Beijing that the new regime in Manila is serious about doing things the right way.
A review of the project ordered by P-Noy shortly after he took over government, recommended renegotiating the project with China, if not trashing it completely. Late last week, former DOTC Secretary Jose de Jesus who had always been diplomatic about the issue, started talking about the real score. Ping said the stalled North Luzon Railways (NorthRail) project should be “reviewed and renegotiated” not only in terms of cost, but also in terms of design.
Ping told a reporter from The STAR that he had been given information by engineers who reviewed the project that the design of NorthRail is not appropriate to the terrain of areas it covers from Metro Manila to Clark. “The technical people who evaluated it said they (Chinese contractors) brought the wrong design using Chinese standards which are not suitable for what we need in terms of terrain,” Ping told our reporter. At least 800 huge concrete piles have already been driven into the ground along a stretch of the railway that shows the ground is a lot softer than anticipated. “The report I got from our engineers is that the design (of the NorthRail project) was not suitable,” De Jesus said.
De Jesus also noted that while the cost of the project’s Phase 1 went up, “the scope of the project went down.” He said the increase in the cost of Phase 1 “should trigger some questions and we were asking these questions (before I resigned from DOTC).”
For example, the number of train stations that CNMEG will build between Caloocan City and Pampanga has been cut to from 11 to only six. Similarly, most of the rolling stock will no longer be provided by CNMEG but by the future operations and maintenance (O&M) contractor and NorthRail.
In a way, NorthRail has lost its urgency. We can spend time to renegotiate a right contract for a system that will handle cargo and short haul passengers. What we need more urgently is a fast commuter train that will connect Clark with the Metro Manila business districts and NAIA and that is contemplated to run along the NLEX.
There are existing private sector proposals to build this fast train. Then again, the PNR right of way that NorthRail is supposed to use can also be used to facilitate the building of this fast connecting train if it turns out that we have to junk NorthRail altogether… or do a double deck with the fast train on top and the slow train below. It isn’t as if we have to build this NorthRail only for the sake of good relations with China. It must serve a purpose and be useful for us.
But I am hopeful that the Chinese leadership will see our point and give us a break on this one. Maybe China can work with the private sector proponents of that connector train from Clark to Manila. And because P-Noy will not allow the sticky fingers of our politicians to mess things up again, even that will be a big incentive for China to work with us. We and China must put this big mistake of a NorthRail behind us and start on a brand new partnership without corruption from either side.
Europe and corruption
Still on corruption and governments, I got this reaction from Rick B. Ramos to our recent column on why European governments must walk the talk on stopping corruption by helping P-Noy deal with obviously anomalous contracts involving their foreign aid programs.
Boo, just two items. First, there is an Agreement within the OECD that started in November 2004 for the signatories to bid out projects that they are funding through the ODA. This Agreement has been extended every two years and will last until 2012. The signatories include members of European Union, Japan and others.
Second, there is another anomalous project done via ODA that the PH government should rescind. This the Mega Bridges project of the DPWH that uses modular steel technology from France. The price of this Mega Bridge cost FOUR to SIX TIMES compared to the flyovers built though conventional construction. This was started during the GMA administration in Iloilo and the Aquino administration is continuing it with the flyover built in Bacolod. Tuwid na Daan. Perhaps, but Diagonal!
My take: I guess FVR is wrong in criticizing P-Noy’s effort to review the anomalous transactions of Ate Glue. We have to set things right and even foreign investors will see this change and be encouraged. Here is how a Bloomberg columnist saw it: “Aquino must not pull any punches in his corruption battle. That has happened too many times in the Philippines. Its people deserve a thorough and public accounting of why their living standards haven’t improved.”
Then again, FVR may have something to hide.
That NAIA 3 fiasco started in his watch. If he didn’t award that non-responding challenge to the taipans’ Emerging Dragons unsolicited bid (but ironically actually publicly solicited by FVR) to build that terminal, we wouldn’t have this problem with Germany. FVR knows PIATCO’s bid should have been rejected because it was not an apples-to-apples challenge to the Emerging Dragons but then again….
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By: Boo Chanco – Demand and Supply
Source: The Philippine Star, Aug. 17, 2011
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