WHAT WENT BEFORE: PNR North 2 background

In 2009, the National Economic and Development Authority board, chaired by then President Gloria Macapagal-Arroyo, approved a $317-million increase in the cost of the Northrail, raising the budget of the China-funded mass transit system to P1.317 billion. The additional cost would have covered foreign exchange adjustments, inflation and “necessary variation orders.”

In 2011, the administration of President Benigno Aquino III vowed to honor the loan the Arroyo administration obtained from the Chinese government to build Northrail but indicated the government would pay only for work the contractor had actually accomplished.

The original contract for Phase 1 (Caloocan City to City of Malolos) amounted to $503 million. The Chinese contractor abandoned the project in February 2008.

The amended contract cost $602 million or an increase of $172 million.

Phase 1 was 22.9-percent completed. The contractor built 80 large columns to secure the structure on soft ground along the Caloocan-Malolos route.

The North Luzon Railways Corp. (NLRC), a subsidiary of the Bases Conversion and Development Authority spent $105 million of the loan on Sept. 29, 2004.

Phase 2 of Northrail will extend to Subic Bay Freeport in Bataan and Zambales provinces. The third phase will connect to Bonifacio Global City while the fourth phase will be linked to Poro Point Special Economic Zone in La Union province.

The University of the Philippines Law Center in 2005 cited “legal infirmities” in the contracts, namely the failure to comply with the requirement of public bidding, the lack of prior Monetary Board concurrence and the absence of a certification of appropriation and availability of funds.

Source: Interviews with NLRC officials