NEDA may yet frustrate President Duterte’s desire to bring about a golden age of infrastructure. NEDA has through the years shown a bias for ODA and GAA and against PPP and unsolicited proposals.

President Duterte has said he is in favor of the unsolicited proposal and Swiss challenge mode for his infra projects. But it will take a stronger presidential expression of preference for NEDA to see the light.

President Duterte is right. Private sector proponents of infra projects under the unsolicited mode are more likely to deliver projects on time and on budget. Only the failure of DPWH to deliver right of way on time can cause delays and cost overruns in private sector-led projects.

Over the last week, NEDA announced that two projects have passed their screening and awaiting President Duterte’s approval. One is the Mindanao Railway and the other is the Subic-Clark railway. Both are funded by ODA which means taxpayers will eventually pay their costs.

It is because public funds are involved that NEDA should more carefully screen such projects as to viability and need. Experts I have talked to think these two rail projects are potential white elephants.

Indeed, when the staff of the Foundation for Economic Freedom asked for a copy of the Subic-Clark feasibility study approved by NEDA, the request was declined. Confidential daw. The truth is, they can’t let a bunch of independent economists review it because it is indefensible. Freedom of Information be dammed.

As I reported last Monday, a transport expert familiar with government’s projects commented that “the feasibility study for Mindanao Railway is very raw, and flawed but NEDA approved it (political pressure). Just to cite a few: timetable is fantasy – completion in 2020 when ROW for 105-km has not yet been surveyed.”

As for the P57.6 billion Subic-Clark Railway, it is being justified as a part of a rail network connecting Subic with the Manila and Batangas ports. But an expert I consulted remains unconvinced it should be built.

“I’m still not convinced it makes sense for cargo. You still need double handling with rail; and you still don’t get the efficiency of long haul travel—whether its 70 km or 500 km plus. There’s no long haul for the Philippines; the country doesn’t have the scale of India or China. If decent roads (not congested) parallel a railway, general cargo is typically dominated by trucking.”

“Note that railways were built in the country before decent roads were built. That’s when PNR freight traffic thrived. Once roads were built and truck-bus competition was in place, the PNR lost most of its market share.”

I am told by experts that traditionally, and in general, cargo movements less than 1,000 km are moved thru highways. Said one: “Cargo rail for that distance of 70 kilometers will be more expensive than trucking.”

Honestly, we are really only talking of the Subic-Clark leg. Absolutely nothing will happen to connect that to Manila, much less to Batangas in the next five years or more. If a stand alone is all we are talking about, this is one project that should be left in the back burner.

Experts also point out that our railway lines are heavily subsidized. If all of those railway dreams get built, all the TRAIN packages won’t be able to raise enough money for the required subsidies.

Said one expert: “Yes, we need to spend more on infrastructure—the right kind that is needed by the country, not what politicians want. If the add-on revenues from TRAIN 1-4 would only be squandered on wrong railway projects, we might as well derail the next packages.”

“The only comfort I get from these rail obsessions is that DOTr’s execution ability is so bad, most of them won’t happen anyway.”

Indeed, SCTEX and the Angeles to Dinalupihan national highway can very well handle the cargo traffic between Subic and Clark for quite a while.

These two haphazard approvals are getting some economists who supported TRAIN worried that bureaucrats who think they have so much money to squander are going to build white elephants.

They should remain focused on completing the basic railway projects (PNR’s commuter and Bicol lines as well the Manila to Clark lines) instead of dissipating funds and attention on Subic-Clark railway whose usefulness is doubtful.

While NEDA quickly approved these two questionable projects that will waste our tax money, it seems they are making San Miguel sweat it out on its unsolicited proposal for a new international airport in Bulacan.

I don’t understand why NEDA should worry about San Miguel’s airport having a good financial return or not. Unlike the railway projects, not a centavo of government money is at stake. If San Miguel is wrong about its financial assumptions, that’s their problem.

The fact that San Miguel has proposed it must mean they have crunched their financial numbers and are confident about the project’s viability. I am not sure it is right for NEDA to ask San Miguel to share their financial details because that’s proprietary information that could be used by rivals in the Swiss challenge.

But San Miguel quickly shared their financial model and other details with NEDA anyway. Hopefully, this gesture of goodwill will be reciprocated with an early approval of the airport proposal.

Of course the project requires some amount of government regulation, notably as it refers to CAAP and the CAB. But financial viability should be left to San Miguel.

I am just worried that NEDA may want to protect the government owned and managed NAIA and Clark and consider San Miguel’s proposal as a threat. The way I look at it, the more the merrier! A private sector owned international airport will force NAIA and Clark to compete by vastly improving services.

It has already happened at Mactan… private management has noticeably improved services even in the old terminal building. The new terminal is to be inaugurated this June and it looks good.

 People deserve the best service, something bureaucrats find difficult to provide.

Source: http://www.philstar.com:8080/business/2018/02/02/1783635/white-elephant