WHAT WENT BEFORE: NorthRail ProjectPhilippine Daily Inquirer / 05:56 AM September 02, 2011
https://newsinfo.inquirer.net/51619/what-went-before-northrail-projectThe NorthRail project involves the rehabilitation of a train line connecting Metro Manila to provinces in northern Luzon.
The project, whose cost reportedly rose from an initial $503 million to about $2 billion, is considered overpriced. Sen. Franklin Drilon was once quoted to have called the project “the greatest train robbery in history.”
Allegations of overprice have hounded the project for years. In 2006, Senators Juan Ponce Enrile and Miriam Defensor-Santiago criticized the project for being overpriced. A 2005 study by the UP Law Center said the NorthRail contract had been improperly packaged as an executive agreement and was thus able to evade public bidding.
In February 2007, the Monetary Board approved a $500-million long-term loan from China Eximbank that would finance the first section of Phase I of the project.
In 2008, Rodolfo “Jun” Lozada, who blew the whistle on irregularities concerning the National Broadband Network deal with China’s ZTE Corp., said the ZTE deal would be done “on a loan project a la NorthRail.”
NorthRail and China National Machinery and Equipment Corp. (Group) signed the agreement to build the railway in December 2003. It has been said that former Speaker Jose de Venecia Jr. had brokered the entry of the Chinese government into the project.
In 2006, Jose Cortes, then president of NorthRail, said at a Senate hearing that De Venecia hosted meetings at his Makati City home between government officials and representatives of the Chinese Embassy to discuss the project.
Cortes said De Venecia “opened the doors” for the government to obtain funds from the Chinese government for the NorthRail and other projects.
Upon assuming office last year, the Aquino administration announced that the NorthRail contract would be reviewed by the Department of Transportation and Communications.
The 80-km railroad, a flagship program of the Arroyo administration, will link the northern flank of Metro Manila with the Diosdado Macapagal International Airport at the Clark free port in Pampanga province.
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PH gov't ends dispute with China's Sinomach over Northrail projectThis resolves an international arbitration case and spares the Philippines from P5 billion in potential fees, says the government
Chrisee Dela Paz
Published 10:05 PM, November 06, 2017
Updated 11:29 PM, November 06, 2017
https://www.rappler.com/business/187551-philippines-dotr-bcda-end-dispute-china-sinomach-northrailMANILA, Philippines – The Philippine government finally resolved a 5-year row with a Chinese machinery conglomerate over a dropped rail deal, putting an end to international arbitration and sparing the country from a P5-billion obligation.
The Department of Transportation (DOTr) and the Bases Conversion and Development Authority (BCDA) said in a joint statement on Monday, November 6, that they, along with North Luzon Railways Corporation (Northrail), concluded an out-of-court settlement agreement with China National Machinery Industry Corporation (Sinomach).
Sinomach is the former contractor of the planned 80-kilometer rail line, which was to be implemented by Northrail, an agency under state-run BCDA.
The Northrail project was supposed to link the northern part of Metro Manila to the Clark International Airport in Pampanga.
But the rail deal was suspended in March 2010 pending review of the contract with Sinomach. In 2012, the contract was dropped after China called off the overseas development assistance fund for the project. (READ: 17 stations of Manila-Clark Railway announced)
In the same year, Sinomach initiated arbitration proceedings in Hong Kong, after it was notified by Northrail that it could no longer proceed with the implementation of the project due to serious legal issues in the contracts.
It was just this January when talks between the Philippine government and Sinomach started, the transportation department said. (READ: Isko Moreno resigns from Duterte government)
The DOTr said the out-of-court settlement agreement was approved by the Commission on Audit (COA), and also certified legal and enforceable by the Office of the Government Corporate Counsel (OGCC).
"[This] will save the Philippine government upwards of $100 million, or more than P5 billion in potential payment of claims to Sinomach, as well as hundreds of millions of pesos in legal fees and arbitration costs," the joint statement reads.
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The transportation department added that the agreement ensures no contractual issues will hamper or compromise the development of the Philippine National Railways (PNR) Manila-Clark Railway project.
The PNR Manila-Clark Railway project was conceptualized as early as 1995 when Northrail was incorporated.
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Northrail settlement spares PH from payment of P5-B claims to Chinese firm: DOTrBy News5-InterAksyon | November 6, 2017, 6:25 pm
http://www.interaksyon.com/northrail-settlement-spares-ph-from-payment-of-p5-b-claims-to-chinese-firm-dotr/< Edited >
As of March 2017, NORTHRAIL, a fully-owned subsidiary of BCDA, has already spent P161 million for its participation in arbitration proceedings, including fees for its legal consultants. Without the Settlement Agreement, NORTHRAIL expects to spend an additional P500 million if the arbitration hearings originally scheduled in November 2017 would take place.
The signing of the Settlement Agreement was witnessed by Foreign Affairs Secretary Allan Peter Cayetano, and Chinese Ambassador to the Philippines Zhao Jianhua. Also present in the event were Executive Secretary Salvador Medialdea and Budget Secretary Ben Diokno.
Manila to Clark RailwayBesides avoiding the potential $106-million liability and more than P500 million in additional legal expenses, the Settlement Agreement will ensure that there will be no more contractual issues that may hamper or compromise the development of the DOTr-Philippine National Railways (PNR) Manila to Clark Railway project. The latter is one of the top priorities under the Duterte Administration’s Build, Build, Build program.
The PNR Manila to Clark Railway project is expected to serve as a catalyst to decongesting Metro Manila, and at the same time bring growth to the regions north of the capital, particularly Central Luzon, where an estimated 11.22 million Filipinos reside and earn their living.
This railway project, which was conceptualized as early as 1995 when NORTHRAIL was incorporated, has long been delayed and was subject of many controversies. However, the Duterte administration, through the DOTr, has expressed its full commitment to finally deliver this project before the end of the President’s term, DOTr said.
Hong Kong arbitrationThe settlement will put an end to the arbitration proceedings initiated by SINOMACH in 2012 after it was notified by NORTHRAIL that it can no longer proceed with the implementation of the project due to serious legal issues in the contracts. The seat of the arbitration proceedings is in Hong Kong, a special administrative region of China.
In February 2016, NORTHRAIL lost the first phase of the arbitration proceedings. The Arbitral Tribunal in Hong Kong published a Partial Award, which upheld the validity of the contracts with SINOMACH.
Having found SINOMACH’s claims meritorious, the Tribunal also ordered NORTHRAIL to bear all costs relating to the first phase of arbitration. It thereafter directed the parties to proceed with the next phase, which is the determination of liability and extent of liability. SINOMACH is claiming almost $106 million from NORTHRAIL for costs it incurred under the contracts and for damages.
Liability for overpricingDespite the signing of the Settlement Agreement, both DOTr Secretary Tugade and BCDA President Dizon said that, in the spirit of truth and justice, the administration will still go after the government officials involved in the allegedly anomalous and/or overpriced contracts.
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Northrail, Chinese firm ink out-of-court settlementLouella Desiderio (The Philippine Star) - November 6, 2017 - 4:00pm
The settlement puts an end to the arbitration proceedings initiated by Sinomach in 2012 in Hong Kong after being notified by Northrail it could no longer proceed with the implementation of the project due to serious legal issues in the contracts.
Initiated by the Arroyo administration, the project was supposed to link the northern part of Metro Manila with the Diosdado Macapagal International Airport in Clark, Pampanga.
The project was
scrapped by the Aquino government due to legal questions and allegations of corruption.
“The historic settlement agreement, which was approved by the Commission on Audit and was likewise reviewed and certified legal and enforceable under Philippine law by the Office of the Government Corporate Counsel, will save the Philippine government upwards of $100 million, or more than P5 billion in potential payment of claims to Sinomach, as well as hundreds of millions of pesos in legal fees and arbitration costs,” the DOTr said.
The settlement would also ensure the development of the Manila to Clark Railway project would proceed without issues.
The P255-billion Manila to Clark Railway is among the priority projects under the Duterte administration’s Build, Build, Build program.
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Read more at
https://www.philstar.com/headlines/2017/11/06/1756463/northrail-chinese-firm-ink-out-court-settlement#0I65eUuqkeWOTHZ7.99
