Panay railways revival still uncertain, requires P37.8B

February 12, 2010

Panay railways revival still uncertain, requires P37.8B

By Francis Allan L. Angelo

THE Department of Transportation and Communications (DOTC) is still looking for funding sources for the reconstruction of Panay Railways which will stretch from Iloilo to Aklan.

In the “Ulat sa Bayan” forum Friday, DOTC Undersecretary Guiling Mamondiong said they have completed the feasibility study (FS) for the Panay Railways project.

The study is now with the Regional Development Council (RDC-6) awaiting the body’s endorsement to the National Economic and Development Authority (NEDA).

Mamondiong said the RDC and NEDA endorsements are needed before they can hatch the project plan and negotiate with probable financial entities.

The project will cost US$600 million (roughly P37.8 billion) and will link Iloilo City to Caticlan in Malay, Aklan, the gateway to Boracay Island.

Mamondiong said they initially negotiated funding from the German bank KfW Bankengruppe and the German government but to no avail.

“KfW said they can only provide commercial loan which has very high interest and short payment period. We also requested funding from the German government but we are not qualified for the Official Development Assistance (ODA) fund of that country,” he added.

The DOTC also offered the project to financiers through the build-operate-transfer (BOT) scheme but no one is interested.

Under the BOT scheme, the government will put up the railway system while a private firm will purchase the locomotives. The operation of Panay Railways stopped in 1985 at the height of the collapse of the sugar industry.

Mamondiong said RDC-6 should act on the project and endorse it to NEDA so they can go ahead with the planning stage and look for financiers.

“We are waiting for the action of the National Economic and Development Authority (NEDA) which is also waiting for the endorsement of the RDC 6 of the FS,” he said.

The decision to extend the railway to Caticlan was made to provide “more comfortable, faster and safe” mode of transportation to Boracay Island.

The DOTC official said they strengthened Panay Railways, Inc. by restoring its office in LaPaz, Iloilo City and providing them with monetary support. The office was also advised not to dispose its road right of ways.

“The decision of the government is there. I don’t think there is any way which we could not implement the project because everything is completed. It is now with NEDA. We are looking forward that the next administration would be able to finally implement the project,” Mamondiong said.

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