Infrastructure News Analysis

Rail project bid process derailed

The off-again, on-again bids schedule for the North-South Railway Project – at US$3.79 billion, the largest deal on the books of the Philippine Public-Private Partnership Center – is off again. The 653-kilometre Manila to Legaspi City south line, it appears, is yet again in bureaucratic bondage. Providing the red tape this time was the Department of Transportation and Communications (DTCI), assisted by the Investment Coordination Committee (ICC) of the National Economic Development Agency (NEDA).

Despite the lengthy gestation period for this project and the fact that it was signed off by outgoing president, Benigno Aquino, last year, and that the procurement process had already started, the DTCI decided – this month – that the entire project should be split into two separate projects – one for the planned commuter railway, the other for the long-haul line.

NEDA and the ICC duly concurred and the procurement process was stopped dead in its tracks. A notice went up on the PPP Center website announcing, under ‘Status’: “Submission of pre-qualification documents is postponed until further notice”. Now new specs for the two projects need to be drawn up before they can both be offered for bids.

Project 1 will involve the 56-km commuter line from Tutuban, Manila to Calamba Laguna. Project 2 will cover the 478-km long-haul line from Tutuban to Albay, Legaspi, with branch extensions from Calamba to Batangas and from Legaspi to Matnog, Sorsogon.

While Project 1 will not suffer from the delay as far as the bidding process is concerned – the adjustments to the technical specs have already been approved by NEDA-ICC – the process for Project 2 will virtually have to start from scratch. Originally, the successful consortium bid for the rail project had been scheduled for March.

But other adjustments were made to the rail project – not least, a new cost appraisal. Apparently, NEDA et al had got the figures wrong on the price for acquiring right of way access to the sites. They had set aside US$324,000 to deal with 38,000 families (it’s unclear what that represents in the total number of people) while in fact they now learn that about 100,000 families could be displaced in expanding access. No cost estimate on the new numbers has been provided to date.

That oversight, however, begs the question that, if a simple head count can be out by a whopping 163% what is the guarantee of the accuracy for other elements of this project? And one thing that NEDA-ICC have still to approve is whether the lines should operate on narrow-gauge or standard-gauge technology.

As the biggest infrastructure project on his books – there’s also the north section to deal with – recently installed NEDA Director-General, Ernesto Pernia, will have to decide whether to go with Plan A, the original project spec for the south lines, which has been approved once, or Plan B, the two-track approach.