THE Department of Transportation and Communications (DOTC) has completed its review of the controversial NorthRail project and has made recommendations on how the administration could best address the contractual and financial issues.

A renegotiation of the contract between the North Luzon Railways Corp. (NorthRail) and Chinese contractor Sinomach is one option, according to Transportation Undersecretary Ruben Reinoso Jr.

“Right now, NorthRail Corp. is in discussions with the contractor, so we are not closing the door to any possibility,” he said.

There is also the possibility of seeking a new contractor but Reinoso said the Chinese government should be consulted on this because the project was financed though official development assistances (ODA).

Sinomach, formerly known as China National Machinery and Equipment Corp., was awarded a contract to rehabilitate the North Railway system, a project funded by a loan from the Chinese Export-Import Bank.

The two phases of the railway project are being reviewed by the DOTC because of allegations of overpricing. The agency also took note of the project’s slow progress; it was approved in 2003, but only 20 percent has been completed.

“It’s an ODA. It’s an agreement between two governments. Anything that we agree on should have an approval of the other government. We are not saying that we will continue with the existing contractor but we are also not saying that we will not work with the existing one. We are discussing it not only on the contractors’ level but at the government level,” said Reinoso.

The DOTC does not recommend scrapping the project, noting its importance to the riding public, especially for those traveling from Manila all the way to Clark in Pampanga.

“Definitely, we will have to continue the NorthRail because it’s a critical transport system that will link Clark airport hopefully to Naia [Ninoy Aquino International Airport]. So definitely, we will renegotiate with the existing contractor or seek a new contractor. This is something that we have to discuss further and find out the advantages and disadvantages,” said Reinoso.

At the same time, the DOTC is exploring the possibility of accessing supplemental financing from the Chinese government to finance improvements on the project.

The DOTC’s report to the President also recommended a reconfiguration of the railway system.

“We also want to renegotiate the contract in such a way that a new configuration, from narrow gates to standard gates, will be implemented. It’s almost 10 years now since the contract was signed and prices have definitely increased,” Reinoso added.

The project’s Section 1, a 42-kilometer train line which runs from Caloocan City to Malolos, Bulacan, has been under construction since 2008. So far, the project is only 20-percent complete. The completion date of Phase 1 has been moved to 2013.

Section 2, which runs from Malolos, Bulacan, to Clark, Pampanga, is also being reviewed to clarify and improve contract conditions and to expedite project implementation.

Meanwhile, another government contract is up for a possible renegotiation. Similar to the NorthRail project, the government should consult with the French government on any changes in the P11.8-billion modular roll-on, roll-off (Roro) ports project.

“[Renegotiation] is an option that we are looking into. We are also not ruling out the cancellation of the project itself because of the issue on necessity. But again we have to honor the contract. If we don’t honor the contract, then who will trust us? It’s the face of the government and not anybody else’s,” Reinoso said..

The multibillion-peso contract, if implemented, will provide 72 modular Roro ports nationwide.

The contract was signed by then-Philippine Ports Authority (PPA) general manager Oscar Sevilla, as well as representatives of the DOTC, the departments of Finance and Budget and Management, and the Bureau of Treasury.

“On ports, we have also completed the report and based on the recommendations of the PPA it said that most of the developments of the country’s ports have already been undertaken by the PPA in the past. So they cannot identify any additional ports,” Reinoso said.

“In fact, the PPA cited only two ports that can qualify as beneficiaries of the modular project. But we have contractual obligations under the contact, and that’s something we are looking thoroughly. What would be these contractual obligations and how much would be the impact on the Philippine government. Again, this is an agreement with another government. So anything that would be decided there should be a subject of approval of both governments.”