NorthRail project to require govt funding until 2028

MANILA, Philippines - The North Luzon Railway project is expected to require government assistance until 2028, a government's cost analysis paper showed. The $1.3-billion Northrail project will need an annual average support of $18.28 million until 2028 from the government. And come 2016, the project will post its biggest losses in 2016 at $368.5 million. "(Our) cashflow analysis shows a negative outstanding cash balance until 2028, which is at its highest at around $368.5 million in 2016," a document said. "National Government advances to Northrail for debt servicing is around P1.063 billion as of end 2008," it added. Given the huge cash resources that the project will need, the National Economic and Development Authority (NEDA) required the North Luzon Railway Corp. to justify its plans. The NEDA, the Philippines’ socioeconomic planning body, also urged the privately-run company to deliver its portion for the civil works and deliver trains before 2013 to cut further project delays. The North Rail was submitted again for another round of evaluation from the inter-agency Investment Coordination Committee (ICC) Cabinet Committee (Cabcom) after its costs were increased and the project proposal was revised. The ICC-CC has "confirmed" the project and approved the request of the NLRC to increase the total project cost by another $798.27 million or 68 percent of the approved cost of the NEDA of $1.176 billion in 2003. The NLRC has also estimated that the project will be financially-viable with a rate of return of 5.179 percent against a weighted average cost of capital of 4.619 percent. Next: Northrail project may not be financially viable, finance dept says Northrail project may not be financially viable, finance dept says But a study by the Department of Finance indicated that the Northrail's rate of return was only 4.31 percent against weighted average cost of capital of 4.39 percent. The DOF estimate included input taxes in investment cost and excluded private sector investment in rolling stocks from investment cost. The NLRC earlier said it had incurred $280 million cost overruns owing to delays in the Phase 1 of Northrail, which will run from Caloocan to Malolos. The NorthRail Project Phase 1 Section 1 is funded by the $421-million concessional loan from the Export-Import Bank of China, while the government counterpart amounted to $82 million. The China National Machinery and Equipment Group is the contractor of the project. The railway project from Caloocan to Malolos, Bulacan, will interconnect and improve access to major transportation facilities in the Manila-Clark-Subic economic triangle, particularly Fort Bonifacio, Clark Special Economic Zone, Subic Special Economic Zone and Poro Point in La Union. The project is aimed at accelerating development in the region. The North Rail project will have stations in Caloocan, Valenzuela, Marilao, Bocaue, Guiguinto and Malolos. The National Housing Authority has so far relocated some 20,000 families residing within the Philippine National Railway’s right of way. The NLRC expects the completion of civil works in August this year. Beijing has also provided $400 million financing for the $503.05 million Northrail Project Phase 1 from Caloocan to Malolos, Bulacan, and a $500 million loan for the $573.66 million Northrail’s Phase 2 from Malolos to Clark, Pampanga. The Chinese concessional loan charges interest of two to three percent a year. It will fall due in 20 years with a five year grace period. - GMANews.TV