Dream projects estimate now P372B; $3B debts set

http://www.tribune.net.ph/business/20060802bus1.html

By Sherwin C. Olaes
08/02/2006

Economic officials have started to scrounge for sources of the cost of President Arroyo’s dream projects spelled out in her State of the Nation Address (Sona) as the latest computation of the Department of Budget and Management places the total amount of the projects at P372.02 billion.

The government said it is negotiating with China and Japan for a total of $3 billion or more than P150 billion in loans but Japan, which has been the biggest source of official development assitance (ODA) to the country, had indicated it would be selective in the granting of cheap loans.

Japan has noted the slow take up of ODAs by the government and had stopped providing low-cost funds in the past three years. The Arroyo administration has failed to put up counterpart financing, blaming the fiscal crisis, on the missed ODA projects.

Mrs. Arroyo announced the massive public spending program last month, which has since been greeted with disbelief by critics but also encouragement by Filipinos and foreign investors who have long complained about poor infrastructure.

Budget Secretary Rolando Andaya told reporters the 92 “big-ticket” items listed by Mrs. Arroyo would cost that much and about half the funding would come from the annual national budgets for 2007-2010.

Part of the program would be funded with development assistance from donor countries, he said.

Socio-Economic Planning Secretary Romulo Neri said the government is talking with China and Japan for billions of dollars in loans to fund the government’s priority infrastructure and social services projects, “China Eximbank has indicated willingness to consider $2 billion a year for the next three years,” Neri said.

Neri added the government is trying to convince Japan to foot $1 billion of the costs from yen loan packages.

Earlier government estimates placed the required funding for the Sona projects from P207 billion to P290 billion.

The private sector would be asked to tender for P68.4-billion worth of projects, 18.39 percent of the total, that would be undertaken through “build-operate-transfer” or similar schemes, while state-run firms would spend P116 billion or 31.8 percent of the total cost of the program.

Local government units would put up P1.33 billion of the total cost, Andaya added.
“The cost per project can still go up or down depending on the prices of construction materials. For example, if oil prices go up, then an escalation in the project cost is to be expected,” he added.

Rail projects account for 48 percent of the project cost, including a light rail loop covering metropolitan Manila.

Road projects would make up 27 percent of the spending, while 43.1 billion pesos or 11 percent of the total would be needed to build or improve 23 airports.

Sea ports, irrigation canals, bridges, windmills, machine-readable passports and refrigerated warehouses make up the rest of the projects, the budget department said in a statement.
Foreign Secretary Alberto Romulo said the project cost breakdown provided by the government should “answer now all the nitpickers, the critics that are appearing in the papers.”
Mrs. Arroyo told reporters all 92 projects she announced represented about a third of the government’s medium-term public infrastructure program.

“That’s why I am quite confident that we can afford it,” she added.

Tax collections have improved over the past two years as the legislature passed a 12-percent sales tax and raised excise taxes on tobacco and alcohol products.