No Chinese ODA has been firmed up for Mindanao Railway

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DAVAO CITY (MindaNews / 28 Nov) – The government has yet to firm up agreements with the Chinese government for the official development assistance (ODA) of the first Tagum City-Davao City-Digos City segment of the Mindanao Railway Project three months before its target groundbreaking set on February 2019.

Finance Secretary Carlos G Dominguez, said during a press conference Wednesday during the Sulong Pilipinas 2018 at the SMX Convention Center Davao, that only around 20 percent of the budget for the first segment of the Mindanao Railway Project will come from domestic funds while the rest will come from the Chinese government with “possible participation for financing from multilateral agencies operating in this area.”

He said the government will also consult Asian Development Bank and Asian Infrastructure Investment Bank for funding of the first segment.

For the domestic sources, Dominguez said it will come mostly from the income of the government from the implementation of the Tax Reform for Acceleration and Inclusion Act, the first package of the Comprehensive Tax Reform Program.

“You know we can, as most people know, you cannot fund everything by debt. You have to put it up with your own capital and our own capital comes in the form of increased tax collections,” he said

The railway project is a major infrastructure project under the Duterte administration’s “Build, Build, Build,” a flagship massive infrastructure program envisioned to increase the productive capacity of the economy, create jobs, increase incomes, and strengthen the investment climate leading to sustained inclusive growth.

The 102-kilometer Tagum City-Davao City-Digos City segment is worth P130 billion for the two-track electricity-run railway project.

The first segment will comprise eight stations, namely: Tagum; Carmen; Panabo; Mudiang (in Bunawan, Davao City); Davao Terminal; Toril; Sta. Cruz; and Digos. A 10-hectare depot will be built in Tagum.

The finance chief said the government is still “at the very beginning” of firming up the agreements with the Chinese government and the international funding agencies to fill in the remaining balance of around 80 percent to fund the railway project.

“Right now, we are really at the very beginning. That beginning involves all kinds of work on the ground like aid, designing the project itself, so that we can determine the final cost, the determining where the alignment will be so that not only will that give us the cost but also will give us the idea of what the right payments are going to be required,” he said.

Once all of these are accomplished, Dominguez said, “then we will talk about financing.”

He said the government is still on track with its target.

The phase 1 Tagum City-Davao City-Digos City line needs another approval from NEDA-ICC brought about by the change in scope and cost of the project after DOTr changed it to two-track electricity-run railway instead of one-track and diesel-run locomotive.

According to the Department of Transportation (DOTr), the railway’s first segment will reduce travel time from Tagum City, Davao del Norte to Digos City, Davao del Sur from 3.5 hours to 1.3 hours once it starts operating in 2022. (Antonio L. Colina IV / MindaNews)

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