Senate urged to probe renegotiated North Rail deal

MANILA -- Former Transportation and now Interior Secretary Manuel Roxas II should explain in a Senate inquiry the details of the renegotiation with Chinese officials on the scandal-tainted Northrail project, a debt watchdog said over the weekend.

The Freedom from Debt Coalition made the call in light of the government's plan to revive the project, where $184 million will be paid to the Export-Import Bank of China (China EXIM Bank) in two years for financing land acquisition and other costs.

That amount is a portion of the $500 million worth of official development assistance (ODA) loan, which aims to construct a high-speed rail system that will link Metro Manila to Clark, Pampanga.

Ricardo Reyes, FDC president, said that since the project's original and amended contracts are void according to the July 14, 2011 opinion of the Office of the Government Corporate Counsel (OGCC), the Philippine government has no obligation to pay the Chinese lender.

"Why should public money be used to pay for a loan agreement that was deemed irregular from the start? Why the people should be made to suffer again from another example of the irregularities committed under the Arroyo administration?" asked Reyes.

If granted by the Senate, the probe should also check how the contractor China National Machinery Industry Corp. (Sinomach) spent the $184 million, among other issues.

FDC questioned why the Department of Finance renegotiated the payment of a portion of the loan when it is clear that the project's original and amended contracts are invalid from the start.

Critics of the deal had also alleged that it failed to undergo a competitive bidding process and that the Buyer Credit Loan Agreement (BCLA) between the government and Sinomach did not secure a clearance from the Monetary Board. (Virgil Lopez/Sunnex)