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Neri says gov't got better terms for rail project
BusinessWorld (17 Aug 2004)

MANILA, PHILIPPINES: The proposed $503-million North Rail project will not be a fiscal burden to the government, Socioeconomic Planning secretary Romulo L. Neri yesterday said.

Mr. Neri told a briefing yesterday that phase one of the project will not require huge government subsidies and that better loan terms had been negotiated.

"The actual cost of constructing the railway comes at $244.74 million and this is reasonable when you compare it with Spanish and Japanese railway systems that were under consideration previously," he said.

Mr. Neri said the project was initially priced at $600 million but the government was able to bring it down to $503 million.

The project proponent is North Railways Corp., a subsidiary of the Bases Conversion Development Authority (BCDA). A loan of $395.22 million in the form of supplier's credit will come from the China National Machinery & Equipment Corp. while the BCDA will provide an additional equity of $107.8 million.

"We were supposed to pay for it in 10 years but we were able to bring it up to 20 years. Interest payment was also reduced from 7% to 3%. This was the first time that China has given a 20-year concessionary loan to a country," Mr. Neri said.

Estimates released by the National Economic and Development Authority said construction of the entire 32.138-kilometer double-track rail system will cost $244.74 million, with each kilometer costing around $7.6 million.

The rest of the $503 million will be used to finance the relocation of squatters, taxes on capital expenditures, and project management funds for the NorthRail Project Management Support Team.

Aside from its economic value, Mr. Neri said the project is attractive because it is expected to speed up passenger and cargo travel between Metro Manila and Central Luzon.

The North Rail project is aimed at revitalizing the long-abandoned Main Line North of the Philippine National Railways (PNR). It will be implemented in four phases.

In the first phase, six stations -- Caloocan, Valenzuela, Marilao, Bocaue, Guiguinto and Malolos -- will be established. It involves the construction and conversion of the existing PNR track into a double track, land acquisition for areas where the existing PNR track is too narrow, procurement of 30 four-car diesel train sets, and the provision of a train control and signaling system.

Copyright © 2004 BusinessWorld Online, Inc. ALL RIGHTS RESERVED.

http://bworldonline.com/current/TheEconomy/ecostory11.html

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