China seen releasing part of $7-billion loan commitment

The Department of Finance (DOF) disclosed on Thursday that a number of loan agreements with China to finance a number of infrastructure projects under the Duterte administration will be signed this year.

DOF Assistant Secretary Maria Edita Z. Tan told financial reporters the loan agreement for the P2.7-billion Chico River irrigation project will be signed in the second or third quarter of this year.

The DOF earlier said that China has identified the entities that will pursue the Chico River irrigation project to its full completion, as well as that of the Kaliwa Dam project.

Finance Secretary Carlos G. Dominguez III said the first batch of projects under Chinese financing include the Chico River Pump Irrigation Project in Cagayan and Kalinga provinces, as well as the New Centennial Water Source-Kaliwa Dam Project in Rizal province.

The governments of the Philippines and China previously agreed to a “tied-loan” funding scheme, in which China will submit candidate bidders to the government in exchange for its financial support.

Tan said the Kaliwa Dam project, as well as the Philippine National Railways (PNR) South Long Haul Project financing agreements, will be signed either in the third or fourth quarter of this year, with both projects falling under the first basket of infrastructure projects for Chinese financing.

The Chinese government has committed $7.34 billion (P376.09 billion) in soft loans and grants to the Philippines in a bid to accelerate the country’s infrastructure buildup.

The DOF’s International Finance Group (IFG) said China’s financial aid will be for 10 big-ticket projects and assistance in the rehabilitation of war-torn Marawi City.

Based on the DOF data, the loans committed by Beijing to Manila now total $7.19 billion (P368.4 billion) for projects in the infrastructure, energy and public-safety sectors, while grants amounted to $148.22 million.

The DOF said the amounts are estimates only and that final figures will be known once these reach the loan-processing stage.

The IFG reported to the finance chief that the assumed loan amount pledged by China account for 85 percent of the total cost for 10 infrastructure projects.

The project cost of the Chico River Pump Irrigation System is estimated at P2.7 billion, the new centennial water source, or the Kaliwa Dam, at P10.9 billion, and the PNR South Rail, which spans Metro Manila to the province of Bicol, at P151.3 billion.

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