Philippines penalised by China for delayed use of funds
China has penalised the Philippines for the delayed use of funds ear marked for a project that would revive the train system running from Metro Manila to the north of the country, reported the Manila Times.
A document from the National Economic and Development Authority (NEDA) showed that the Export-Import Bank of China penalized Manila to the tune of $2.52 million as of October last year for the NorthRail Project Phase 1 Section 2.
“Had the project proceeded as planned with the loan fully utilized before 2008, the total commitment fee would amount to only $0.88 million,” NEDA said.
Under the agreement between the Philippine and Chinese governments, a commitment fee shall be pail to the Chinese Eximbank at a rate of 0.2 percent per annum on the daily unutilized portion of the loan facility.
The NEDA said the North Luzon Railway Corp. (NLRC), the project implementing agency, only disbursed 12.52 percent of the fund at end-September 2008.
“While the NLRC took into account the possible effects of the economic slowdown in its traffic revalidation, the [NEDA-Investment Coordinating Council] is unable to concur on their validity. It noted that if the traffic estimates of NLRC are not realized, the project may not be economically and financially unviable,” the document said.
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