Northrail Project (Phases 1 and 2)
The Northrail Project tops our list of the government’s priority projects. As part of the PGMA’s plans for building linkages through better infrastructure, the Northrail project is a 64-kilometer stretch that links Caloocan to Clark, Pampanga. Divided into two 32-kilometer-long phases, Northrail is primarily funded by a loan from China’s Eximbank. The Investment Requirement stated in the PPS Report amounted to a total of P61.91B for both phases. The approved budget amounted to USD503M for Phase 1 and USD673.67M for Phase 2. The project is under the wing of the DOTC. The Bids and Awards Committee (BAC) assigned to the project is the BCDA Northrail BAC. Bidding and other procurement proceedings will be closely watched by the assigned CSO, TAN. So far, documents that have been previously submitted include: (1) Loan Agreement with China Exim Bank, (2) Contract with NHA, (3) Project Appraisal Report, and (4) Report on Negative Slippage. The Northrail project remains to be a hot topic years after the idea was first proposed to the public. Allegations about the validity of the contract, subsequent delays and overpricing continue to hound the project. At this stage of the project, the action needed is a report on the findings from CSO observers.
UPDATES:
14 May 2009:
Northrail case back on track
The Supreme Court has found no merit in the petition of China National Machinery and Equipment Corp. Group (CNMEG) to stop a Makati Court from hearing a petition to void their stake in the $503-m Northrail Project.
CNMEG’s petition stated that Judge Cesar Sta. Maria of Makati Regional Trial Court Branch 145 erred hwen he ordered the petitioner to appear and explain the detail of the Northrail contract since it had “no jurisdiction over the person of herein petitioner and over the subject matter of the said case.” Further, it claimed that allowing the proceedings at the Makati court would “disrespect the sovereignty of the People’s Republic of China.”
CNMEG’s counsels culled Republic Act 8975, which prohibits lower courts from issuing restraining orders and injunction on government infrastructure projects. Moreover, the counsels said that the “Petitioners stand to suffer grave and irreparable injury by being compelled to answer private lawyers’ unjust and baseless claims. Petitioner has already commenced its duties and responsibilities under the Northrail project and invested its precious time, skills, industries and finances for the said project.”
The SC’s ruling upholds a previous decision by the Court of Appeals (CA) last year, wherein they found no merit in CNMEG’s claim that as a state-owned firm of the People’s Republic of China, it enjoys diplomatic immunity.
CA’s decision reads: “[The CNMEG] must request the Foreign Office of a state where it is sued to convey to the court that it is entitled to such a privilege. In this country, the practice is for the foreign entity to first secure an executive endorsement of diplomatic immunity. The bottom line is, (the request) must come from the DFA (Department of Foreign Affairs) which is the proper government agency with administrative competence to perform the task associated with diplomacy and foreign relations.”
2 April 2009: An additional P9.82B of official development assistance was approved by Malacanang to be sourced for seven infrastructure projects that exceeded their budget. The Northrail Project is one of the seven projects that incurred cost overruns; it overshot its budget by P2.76B.
The increase in prices of inputs from the time of apprival to the
start of project implementation was cited as one of the reasons
for the cost overrun, as explained by Roderick M. Planta, the
Director of NEDA’s project monitoring staff.The total cost overruns for 19 ODA-funded projects will reach
a total of P28.82B, NEDA explained.10 other projects needed P14.5B in additional funding, but
were not granted because their ODA packages have since
been closed.Source: PDI, April 2, 2009.
(3 December 2008) According to the Pro-Performance System (PPS) report as of October 31, 2008:
ROWA for additional right-of-way is ongoing. Negotiation with CNMEG is ongoing regarding the technical and commercial aspects of the project.
(25 November 2008) According to news articles published in the Philippine Star and Manila Standard Today:
Former speaker Jose de Venecia Jr. absolved himself in the controversial USD503M Northrail project, denying that he received kickbacks. De Venecia said it was President Arroyo and her top officials who should be held to account for any irregularity in the project. De Venecia cleared former finance secretary Cesar Purisima, former foreign secretary Delia Albert and incumbent Foreign Affairs chief Albert Romulo of any criminal liability. However, other politicians question De Venecia’s credibility and timing.
(7 November 2008) According to a news article published in the Philippine Star:
Former Speaker Jose De Venecia, Fr. has declared that he is ready to testify regarding anomalies and irregularities surrounding the $500M Northrail project. De Venecua failed to appear in a previous Senate probe regarding the Northrail project.
(13 October 2008) According to news articles published in the Philippine Daily Inquirer and the Philippine Star:
The Court of Appeals (CA) upheld the ruling on the contract agreement of Northrail and the China National Machinery and Equipment Corporation (CNMEC). UP law professor Harry Roque and his group had asserted that the project contract and the Buyer Credit Loan Agreement should be nullified because it is illegal and unconstitutional. While CNMEC has claimed diplomatic immunity, being a state owned firm of the People’s Republic of China, the CA still ruled that the Northrail Project and CNMEC are still subject to RP laws, not international laws.
(2 October 2008) According to a news article published in the Philippine Star:
COA asserted that the contract for the Northrail project should be “considered null and void” because the contract was signed without any public bidding, and that it was not supported by a Certificate of Availability of Funds. Without a CAF, the project would be susceptible to delays and the incurrence of high commitment fees.
(17 July 2008) According to a news article published in The Philippine Star:
The China National Machinery and Equipment Corp. Group (CNMEG) suspended construction of the Northrail project pending resolution of issues concerning project design, additional ROW acquisition, utility relocation and probable variation orders and cost overruns. Subsequently, Northrail project Chairman Edgardo Pamintuan said that CNMEG official later clarified that the project will push through after all.
