PH to tap China for 1146-B ODA

The Department of Finance (DOF) said yesterday the government will tap China for 1146 billion worth of loans and grants to finance some of the Duterte administration’s infrastructure projects.

Finance Secretary Carlos G. Dominguez III said the government is estimating that its total borrowings from China for the initial three big-ticket projects already identified for possible roll out would reach 1140 billion.

Dominguez said these infrastructure projects for Chinese financing are the 110.9-billion New Centennial Water Source-Kaliwa Dam Project in Quezon province, and the 12.7-billion Chico River Pump Irrigation Project in Cagayan and Kalinga provinces.

Also included is the proposed South Line of the Philippine National Railways (PNR), which has an estimated project cost of 1151.3 billion.

The remaining balance of P24.9 billion will be funded by the Philippines’ General Appropriations Act (GAA), or the annual national budget.

“As we go forward, we will be negotiating for the projects that the Chinese government will fund. Initially, there are three projects that they will fund, these are the Chico River Irrigation System, the Kaliwa Dam and the PNR South Line,” Dominguez said.

Last March, Dominguez said that on top of the first three projects, the Duterte administration would also pitch up to nine projects that can be rolled out in the next two to three years for potential Chinese financing.

Aside from the official development assistance (ODA) loans, Dominguez also revealed that the Philippines would get 15.96 billion in grants from China to build two bridges in Metro Manila.

The first grant, costing 14.6 billion, will fund the construction of a bridge between Intramuros and Binondo in Manila, while the second aid amounting to 11.36 billion will finance the EstrellaPantaleon bridge, also known as the Rockwell

bridge.

“These are two of the 12 bridges that this administration is planning to span the Pasig river,” Dominguez said.

When asked about the interest rates, Dominguez said “for the grants zero, because we are not expected to pay it back. For the loans, we are negotiating at the moment… at around 2 percent per annum and we are negotiating for a lower amount than this.”

Dominguez said the initial 1146-billion infrastructure funding from Beijng is part of Chinese President Xi Jinping’s $9 billion commitment for about 40 proposed government-to-government projects that have been submitted by the Duterte administration.

“In October of 2016, Chinese President Xi Jinping mentioned a total of roughly $9 billion, in terms of ODA financing and commercial loan financing. At this point in time, we’re firming up those commitments and we will do it on a project to project basis,” he said.

In a related development, Dominguez said they are awaiting approval from Chinese authorities of the Philippines’ planned maiden Panda bond issuance.

“At present, we’re negotiating for first loan of $200 million and this will be what is known as panda bond. We are floating for the first time in history a bond in China to test the market,” Dominguez said.

The finance chief earlier said the government was in talks with a Chinese financial institution for a possible Panda bond issuance in the second half of 2017.

National Treasurer Rosalia B. de Leon said the amount they will issue “would still depend on the appetite and the market conditions in the onshore RMB (renminbi) market.”

“We’ve not really set a minimum,” she said, noting that possible tenors would be three to five years.

De Leon said Panda bond issuance was one way for the government to diversify its investments.

“Also, eventually, we see the Panda or RMB market would be the third largest debt market after the Samurai and the US. I think we also have to have a footprint in the Panda market,” she added.