ADB willing to fund Mindanao Railway Project

THE ASIAN Development Bank (ADB) said it is ready to finance the Mindanao Railway Project, with the long-delayed rail line still needing a source of funding after China withdrew support.

“We would be willing to fund it, if we were asked,” ADB Country Director for the Philippines Andrew Jeffries told BusinessWorld on Wednesday. 

Earlier this month, Transportation Undersecretary for Railways Timothy John R. Batan said the Department of Transportation (DoTr) is still looking for funding for the railway. 

The ADB said it is willing to assist the government to ensure the completion of the Mindanao Railway Project, one of the big-ticket DoTr projects. 

He said, however, that government efforts to rein in debt levels will be a consideration in determining the ADB’s ultimate involvement.

“Given our engagement with the government and their concern on maintaining and reducing government debt levels over time, I think they would want to explore as much private funding as they can,” Mr. Jeffries said. 

The ADB is ready to provide official development assistance (ODA) loans, or provide public-private partnership (PPP) advisory services to help bring in investments, he said. 

“The private sector could even fund some of that project like they did in the Mactan-Cebu Airport and the like. I guess we could also support it without touching ODA or public debt. That is one of the strategic pillars of what ADB is also trying to do region-wide,” Mr. Jeffries said. 

In 2023, the Philippines withdrew its loan request for ODA from China for the Mindanao Railway Project phase 1, and two more railway projects — the South Long-Haul railway, and the Subic-Clark railway, due to lack of progress towards a financing decision by Beijing.

The first phase of the Mindanao Railway Project is valued at P83 billion. It will run between Tagum, Davao del Norte and Digos City, Davao del Sur. It is expected to carry 122,000 passengers per day and cut travel time between Tagum and Digos from three hours to one.

Mr. Batan has said that the DoTr is exploring the possibility of PPPs structure for the Mindanao Railway Project. 

For now, the DoTr remains uncertain when groundbreaking for the project can begin, as the government is still determining how to fund it.

Mr. Batan added that the DoTr does not expect any progress on the financing front within the year due to the need to update the feasibility study.

Last month, the PPP Center said that the pre-feasibility study for the P100.64-billion phase 3 of the Mindanao Railway Project was completed. 

Phase 3, proposed as a solicited PPP, is a 61‑kilometer passenger and cargo railway linking the industrial and commercial centers of Cagayan de Oro.

The DoTr will move to a comprehensive feasibility study to assess and refine the project’s technical, financial, and economic viability, the PPP Center said. — Ashley Erika O. Jose