Stalled railway project high on aquino agenda

Philippine President Benigno Aquino will discuss a controversial Chinese-funded railway project when he flies into Beijing today at the start of a five-day state visit.

Philippine Secretary for Transportation and Communications Manuel Roxas confirmed at the weekend that the suspended North Luzon Railways (Northrail) project 'will be one of the matters to be discussed'.

'We are seeking amendments to the existing agreement so that problems can be addressed,' Roxas said, without elaborating.

The Northrail was to have been the showcase of a 'golden age' in Philippine-Chinese relations when it was made the centrepiece of President Hu Jintao's state visit to Manila in 2005.

During the visit, the Export-Import Bank of China extended a US$400 million loan facility to Manila covering phase one of the project. This would have involved upgrading 32 kilometres of an old 80km railway line running from Metro Manila to Clark international airport in Pampanga province.

A contract was agreed with China National Machinery Industry Corp - formerly China National Machinery and Equipment Corp - to build the project.

However, it was soon derailed by charges of overpricing and illegality because no public bidding was held. Other delays were caused by squatters on land where the railway tracks would pass.

Northrail soon became a political hot potato for then Philippine president Gloria Macapagal-Arroyo, becoming a basis for an impeachment complaint against her that was thrown out by her lawmaker allies. However, a separate lawsuit filed by residents who would be displaced by the project is still pending.

Work on the railway began in 2008, but in May this year, Northrail halted building for a thorough review by then transport and communications secretary Jose de Jesus.

After he resigned due to poor health, De Jesus criticised Northrail, saying the design was wrong - 'the ground (for the piles) is a lot softer than anticipated' - and it would cost too much. He estimated that up to US$2 billion more would be needed to complete the project in addition to the US$621 million already spent.

The Chinese embassy in Manila declined to say how much has been spent so far.

China's ambassador to Manila, Liu Jianchao, said last week that Beijing was open to a review of the project.

'We are ready to have further discussions with the Philippine government on what we are going to do about the project. We hope it will materialise and we hope that the project will benefit the Philippine people in whatever way,' Liu said.

'The Northrail project I believe, and the Philippine government believes, is one the Philippine government needs. China takes a very positive and open approach to this project.'

Beijing will have to convince Aquino that it is a worthy project.

Before running for president, he said the Northrail was one project he would review if he won because it delivered 'less bang for the buck'.

He explained why: 'You take a project like Northrail and contrast it to Southrail by the Koreans. The Koreans will build a 34-kilometre narrow-gauge railway system for US$50 million. The first phase of Northrail is US$503 million for 32 kilometres.'

$421m

The original US-dollar cost estimate for the first 32km of the 80km railway link between Manila and Clark airport in Pampanga