BEIJING (via PLDT) – The Philippines is seeking to re-bid the NorthRail contract between the government and Chinese firm China National Machinery and Equipment Corp. (CNMEC) in the hope of getting better terms.
Transportation Secretary Manuel Roxas II told reporters that the Chinese have agreed to “reconfigure” the NorthRail project, but the terms would have to be discussed by his department and his Chinese counterpart. He said this development became apparent during the meeting between President Aquino and Chinese President Hu Jintao.
Roxas, in an ambush interview while on a tour of the Forbidden City with Aquino and his delegation, said the project would have to be redesigned and that CNMEC would be compensated for its efforts.
He said CNMEC had completed only one kilometer of the 90 kilometers in the contract and the advance payment of the Philippine government would likely even exceed the amount that would be paid to the contractor. He said engineers and finance experts would determine the amount.
“There is what you call value engineering,” Roxas said, adding, “The key word that we are using is reconfiguration.”
“Both in substance and in form, reconfiguration has a difference with renegotiation. Renegotiation means the existing contract will be changed. Reconfiguration is the project itself will be changed,” he said.
On Wednesday, Aquino said they discussed the government’s appeal regarding the NorthRail project, with the Chinese expressing concern that one of their companies might be put at a disadvantage.
“I think the response basically was there’s a Chinese company that expended its time, its efforts, certain resources – their rights have to be respected. But no, our proposal is there so that would be taken care of and further discussions between our Department of Transportation and Communications and the responsible officials that the Chinese have. So that is yet to be resolved,” Aquino said during an interview with the media over coffee.
Asked if the Chinese side was open to renegotiation, the President said the answer was subject to interpretation.
“When they get to discussing the details, it would be the proper time for me to really stress and really emphasize what the details are rather than say something right now based on my interpretation of what they said, which is open to other interpretations,” Aquino said.
Reconfiguration
“Precisely it’s a reconfiguration so instead of going back and focusing on the problematic present, we will reconfigure the entire project, not just the contract. What’s important for us is a rail link north,” Roxas said.
“The NorthRail project is an attempt to operationalize that. We have problems with that and so we will reconfigure the project itself, not just the contract, so that it will go into the central business district of Metro Manila. Now it just stops in Caloocan, and it will go to the airport itself because now it stops in Mabalacat (Pampanga),” he said.
Roxas explained that what had originally been intended to link the two airports ended up being just a commuter system with about 10 stops.
“So obviously this cannot be used by the passengers at the airport. And it stopped in Mabalacat, which is about 15 kilometers short of the Clark airport facility, and then at the Caloocan port which is another 15 kilometers short of the Central Business District which is also quite important for us,” he said.
“Our intent is to write up a whole new project (for the same cost) – it will be what it will be. We will write the terms of reference. This is our desire and this is what the ministers will flesh out… we will write up a whole new project, the Philippine side will write up the terms of reference unlike the existing (contract) where the Chinese side will write the terms of reference,” Roxas said.
“In recognition of the Chinese financing, the accreditation will be among experienced Chinese rail companies, not just any contractor,” he said.
Roxas said the project “will be bidded out” if and when the talks with the Chinese government end successfully. He said he could not say if China was amenable to such terms.
“All we can say is that they are open and they said the ministers would have to go back and attend to the details,” he said.
Roxas said the development was significant because the Chinese side did not flatly reject the Philippines’ appeals.
Allegations of corruption have tainted Chinese projects in the Philippines, including the NorthRail and SouthRail projects as well as the national broadband network (NBN) project. Then President Gloria Macapagal-Arroyo had to cancel the NBN deal in the wake of allegations that her husband and some of her officials received kickbacks from NBN contractor ZTE Corp.
“We will write specifically each other (his counterpart) maybe in a month’s time. But right now, there are no additional costs because the operations (for the project) were suspended,” Roxas said.
He said he didn’t know how much a reconfigured project would cost.
“It’s hard to tell, we leave it up to the engineers. The big difference is that what we want are as follows: number one, we will write the terms of reference unlike at present where the (Chinese contractor) wrote the terms of reference,” Roxas said.
“Secondly, we will determine the accomplishments, unlike now wherein the bank releases the (money) to the (Chinese contractor) according to what they said they had done when we will be the ones to pay for the debt,” he said.
Roxas said the debtor should be the one to determine the accomplishments.
“Thirdly, there should be a bidding instead of just designating any company,” Roxas said.
Based on its records, CNMEC’s expertise is in dams and other projects and not in railways.
In 2004, China agreed to provide some $400 million to begin the project, initially the phase connecting Caloocan City and Malolos in Bulacan.
Considered as the largest Chinese project in Southeast Asia, the NorthRail project was also planned to extend to the Diosdado Macapagal International Airport in Clark freeport, Pampanga.
Its second phase was designed to cover the Subic Freeport Zone in Zambales while its third phase would cover Caloocan City to the Fort Bonifacio Global City in Taguig.
The fourth phase, based on plans, will pass through Pampanga, Tarlac, and Pangasinan until San Fernando, La Union.
According to its original proposal, the company will install a double-track system using narrow gauge tracks compatible with those being used by the Philippine National Railways.
Once completed, the 32-kilometer railway is expected to carry 350,000 commuters daily, including those coming from the Light Rail Transit and the Metro Rail Transit in Metro Manila, which will later be connected to NorthRail.
Transparency
Meanwhile, Isabela Rep. Rodolfo Albano called on President Aquino and his delegation to reveal all the deals and transactions they made in China.
“In keeping with the administration’s avowed policy of transparency, all trade and business agreements should be bared and detailed,” Albano said.
“With over 300 businessmen accompanying the President, there is much public interest on possible new trade deals,” he said.
Albano is a colleague of former president and now Pampanga Rep. Gloria Macapagal-Arroyo in the House opposition bloc.
Arroyo made several trips to China during her nine-year presidency, including a lightning visit in 2007, when, according to a Malacañang press release, she “came and went like a thief in the night,” bringing home billions of dollars worth of deals.
One such deal was the $329-million NBN deal. At least two witnesses in the Senate inquiry into the NBN controversy claimed the contract was overpriced and laden with kickbacks.
On the other hand, Cagayan de Oro City Rep. Rufus Rodriguez – an administration ally – lauded Aquino for his successful China trip.
“The $60-billion worth of agreements signed during the Beijing visit will go a long way in helping the country develop its economy. The decision to ‘reconfigure’ the expensive North Luzon rail project will save us money,” he said.
Rodriguez said the discussions on the territorial dispute over the Spratlys group of islets laid down the basis for the eventual resolution of the conflict.
“The consensus was to settle this among claimant-countries with the involvement of ASEAN (Association of Southeast Asian Nations),” he said.
He added that he has no doubt that President Aquino protected the country’s interest in all the discussions and agreements he made with Chinese officials.
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By: Aurea Calica with Jess Diaz
Source: The Philippine Star, Sept. 2, 2011
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