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Cost of North Rail Project reasonable
ROMULO L. NERI, secretary of socioeconomic planning, Letters to the Editor, Inquirer News Service (19 Aug 2004 Updated 04:35:51 Mla time)

PHILIPPINES: REGARDING the articles on the North Rail Project (8/14/04 8/16/04), we would like to clarify the following:

1. The "nearly P1-billion cost per kilometer" of the project's Phase I appears to have been arrived at by dividing the $503-million total project cost by the project length of 32.14 km. This calculation is misleading since the project has several components: a 32.14-km, double rail track system between Caloocan to Malolos, consisting of: (a) civil and track works (which includes rail tracks, stations, depot, etc., worth $281 million); (b) 21 four-car train (84 car trains) rolling stock worth $88 million; (c) additional right of way for narrow sections and relocation of utilities which would cost $18 million; (d) signaling and communications estimated at $30 million; and (e) other costs amounting to $87 million.

Based on the breakdown, the cost per kilometer of the civil and track works for 32.14-km double track system is only $4.3 million or P240 million and the cost per rail kilometer is $4.2 million or P234 million. As for the $87 million (other costs), $75 million of this would go to pay for taxes and $19 million, for project management, among others, while the rolling stock is estimated at $1 million per car train. Thus, we believe that the cost of the North Rail Project-Phase 1 is reasonable and comparable to industry standards.

2. On the need for the government to "undertake a very thorough feasibility study on this project," we assure the public that the project underwent the normal government approval process, including a feasibility study, submitted as a requirement to the Investment Coordination Committee, which reviewed and validated it. The ICC based its decision on the economic viability of rail transport to impart social benefits by providing reliable, efficient, environment-friendly, convenient and time-saving mode of public transportation. As for the North Rail, it will decongest Metro Manila-one of the President's eight-point agenda for a Strong Republic-and encourage dispersal of Metro Manila's population toward Central and Northern Luzon, thus spurring growth in the north.

The ICC also deemed the project financially feasible based on revenue forecasts that used projections on traffic volumes. The bulk of the project will be financed through a highly concessional loan from the Chinese government with a 20-year repayment period, inclusive of a 5-year grace period at 3 percent interest. This is the first time that the Chinese government is giving us a highly concessional loan for rail projects.

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