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NEDA cool to extra $300M for Northrail

Vol. XXII, No. 144 [BusinessWorld Online ]

Monday, February 23, 2009 | MANILA, PHILIPPINES


THE NATIONAL Economic and Development Authority is cool to North Luzon Railways Corp.’s (Northrail) request for an additional $300 million to complete the $503-million first phase of the NorthRail Project that will link Metro Manila to Malolos City in Bulacan, the agency’s head told reporters late last week.

Socioeconomic Planning Sec. Ralph G. Recto said the request is still pending with NEDA.

"The last instruction I remember from the President is to keep the original budget and that there will be no increases, and I support that position," he told reporters in MalacaƱan Palace.

The request is scheduled to be discussed at the next Cabinet meeting in Clark Freeport tomorrow, Virgilio Vitug, Northrail senior manager for corporate affairs, told reporters separately.

"We will hold further comment until that meeting, because the NorthRail project will still be taken up during the meeting this week," he said.

Delayed squatters clearing

Mr. Vitug added that "we would like to make it clear that we are seeking this additional $300 million because of the due diligence we did on the cost adjustments. The contract price of $503 million was approved in 2004. By now, there will be inflationary costs and foreign exchange losses."

Project contractor China National Machinery and Equipment Corp. (CNMEG) unilaterally suspended work on the NorthRail project last year, saying it needed an additional $299 million to proceed due to unforeseen additional costs like right-of-way. Among others, CNMEG cited the slow relocation of illegal settlers along the railway’s route.

Of the additional $299 million, almost two-thirds or $211 million was to cover foreign exchange losses, inflation and cost of the delay in construction, while the remaining $88.63 million was due to changes in the original work design. — BSSD

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