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Philippines to tap 1.8 bln USD concessional loan from China for infrastructure

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MANILA, May 11 (Xinhua) -- Philippine President Benigno Aquino III may tap the remaining balance of the 1.8 billion U.S. dollar concessional loan from China in order to bolster the country's infrastructure development.

According to Finance Secretary Cesar Purisima, China's Ministry of Finance and other officials have encouraged the Philippines to use the remaining 1.1 billion U.S. dollars from the concessional loan that the Chinese government has earlier granted to the country.

Purisima, who led a trade and investment mission to China in early April, said that Beijing has assured them that the amount is available for the Philippines.

Earlier, Purisima said that a number of Chinese state-owned firms have already signified their interest in participating in big-ticket infrastructure projects in the Philippines under the government's public-private partnership (PPP) program.

President Aquino has said that there is a need to fast-track the implementation of the PPP programs and projects "to accelerate infrastructure development and sustain economic growth in the country."

Projects to be funded through the PPP scheme include airports, roads, railways, water supply systems, irrigation systems, school buildings, health facilities, solid waste management services and other social support projects.

The Philippines is among developing countries in Asia that has taken advantage of the mostly long-term and low interest Chinese credit facility that is given more in the nature of official development assistance.

The Export-Import Bank of China administers the concessional loans for the Chinese government.

The primary objective of the concessional loans is to promote the economic development and improve the living standards of developing countries aside from boosting economic cooperation between China and Third World countries in Asia, Latin America and Africa.

In the Philippines, two big-ticket projects were initially funded by the Export-Import Bank of China but the national broadband network (NBN) project with the ZTE Corporation was scrapped by former President Gloria Macapagal-Arroyo after allegations of irregularities were exposed in the Philippine Senate.

About a third of the 1.8 billion U.S. dollar original concessional loan has been spent for the other big project, such as the North Luzon Railway (Northrail) project, which is now scheduled for renegotiation.

A review of the Northrail contract, which is being undertaken by the Department of Transportation and Communications (DOTC), is going to be the litmus test on the reliability of the Philippine government in honoring its commitments to a foreign partner.

Purisima himself admitted that Chinese officials have expressed some worries about the outcome of the Northrail renegotiation.

He said Beijing wanted to attain "clarity" with regards the controversial Northrail Project. "They would like to know as to how both countries can move forward and come up with mutually beneficial disposition on the area so that we can get back with the bilateral agreement," Purisima said.

Angeles City Mayor Edgardo Pamintuan, former chairman of the North Luzon Railways Corp. (Northrail) that had overseen the project during the Arroyo administration, has already warned that if not renegotiated properly, the Northrail Project could endanger the bilateral relations between the Philippines and China.

Pamintuan said that even if the project would turn out to be more expensive, China should not be blamed since it only lent the money to the Philippines for the project. He called on the Aquino administration to respect the terms of the contract, including amendments that would be mutually agreed by both parties.

Conceived in the mid-l990s, the Northrail project is aimed at providing a rapid mass transport system that will connect Metro Manila with Central Luzon. It is also expected to boost economic activity at the Diosdado Macapagal International Airport at Clark Economic Zone in the province of Pampanga, a former American air base some 80 kilometers north of Manila.

According to the DOTC, discussions on the Northrail Project with the Chinese company Sinomach would likely be completed by the end of May or early June.

Construction of the 80-kilometer railway has been slowed down because of problems in acquiring right of way of private lands used in the project and in the resettlement of squatter colonies along the railway tracks.

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