ADB guarantee to cover the payments of the operator of the North-South Commuter Railway
The PHILIPPINES wants to borrow up to $800 million from the Asian Development Bank (ADB) to act as a partial credit guarantee (PCG) that will guarantee payments to the operator of the North-South Commuter Railway (NSCR) project, the bank said.
According to the project data sheet, ADB said the government has asked ADB to provide PCG to ensure that the winning operator is paid, while addressing market concerns about delays or non-payment.
The availability of PCG will ensure the efficiency and sustainability of the NSCR project, ADB said, adding that this approach will encourage participation in bids, improve competition and strengthen the financial performance of transactions.
“PCG will back a pending letter of credit issued by a reputable commercial bank, which reduces liquidity risk and improves bankability,” ADB said.
The proposed PCG amounting to $800 million is equivalent to 24 months of availability of payment obligation, it said, adding that it jeopardizes the Department of Transportation (DoTr) NSCR O&M Public-Private Partnership (PPP).
“This PCG-backed letter of credit will support private sector participation in the operation and maintenance (O&M) of the NSCR under a long-term PPP arrangement,” it said.
Last year, the DoTr held road shows in Japan, Singapore and France to promote the P229.32-billion O&M contract for the NSCR project.
According to instructions to bidders, the final O&M concession agreement will be issued on April 30. Bids will be accepted on May 29 at 11 a.m., according to the PPP Center.
To qualify for this job, the applicant must have a minimum net worth of P114.65 billion or its equivalent in foreign currency as of fiscal year 2024. In consortia, the leading member of the consortium must have an equity interest of at least 34% of both the voting and non-voting shares of the O&M concessionaire, the DoTr said.
Tenders including consortium members or affiliates must include at least one business with 10 years of experience in rail operations, especially in managing a railroad that handles at least 45,000 passengers per hour in each direction.
At least one company must have eight years of experience in maintaining railway infrastructure and systems, including the use of a computerized maintenance management system, and the other must have eight years of experience in maintaining railway infrastructure and public infrastructure.
The NSCR O&M agreement will cover 15 years from the date of signing the contract, DoTr said.
The 147-kilometer NSCR will connect Malolos, Bulacan and Clark International Airport, as well as Tutuban, Manila and Calamba, Laguna. This P873 billion project is financed by the Japan International Cooperation Agency and ADB. It will have 35 stations and three depots.
Full operation is expected in January 2032; partial operation of the Malolos to Valenzuela section in December 2027; and the operation of the section from Clark to West Valenzuela in October 2028. – Ashley Erika O. Jose
