The Philippines Department of Transportation (DoTr), through aid from the governments of China and Japan and multilateral agencies, is set to invest $180 billion in the development of the railway network. This includes development of new lines and systems as well as modernisation of existing systems.

Operational network

One mass rapid transit (MRT) and two light rail transit (LRT) lines, spanning a total of 51.8 km, are currently operational in the country, mainly serving Metro Manila. Table 1 provides details about the current operational urban rail network in the country.

Capital projects and extensions

Several LRT, monorail, and MRT lines and systems are planned to be developed. The urban rail network is expected to increase by over 100 km, while the entire railway network is expected to cross 1,700 km by 2025. Of the total urban rail network, 18.51 km will be added to the LRT lines and 59 km to the MRT lines and 26.4 km of monorail lines will be developed. The projects are being funded by the government, multilateral agencies, and the private sector. Bids for several projects are yet to be invited.

Table 2 provides details about the planned extensions.

Rolling stock: A fleet of 30 four-car trains will be deployed on the LRT-1 South Extension and five four-car trains will be deployed on the LRT-2 West Extension.

For MRT-7, Hyundai Rotem will supply 36 three-car train sets by the second half of 2019 under a $440.2 million contract secured in January 2016.

Need for rehabilitation

The country’s transportation network has recently faced sharp criticism for frequent train breakdowns, long passenger lines, and other glitches (including defective, non-closing train doors and non-functioning air-conditioning equipment). The daily passenger carrying capacity of MRT-3 fell from 500,000 passengers in 2012 to 388,000 passengers in 2017.

The government realised that robust economic growth, rising business confidence, and improved competitiveness outlook can only be achieved with the proper and efficient development and maintenance of infrastructure, and thus the need for modernisation was stressed.

Huge investments are being made in the rehabilitation of the existing LRT and MRT systems. LRT-1 and LRT-2 are being upgraded and modernised at an estimated investment of PhP 7,078 million, funded entirely by the Government of the Philippines. The upgradation was announced in 2011 and is expected to be completed by 2020. The project includes major repair and rehabilitation of the rolling stock, systems, structures, viaducts of the carriageway, etc.

The MRT-3 rehabilitation project is expected to cost $413 million, of which $362 million will be funded by official development assistance from the Japan International Cooperation Agency and the remaining $62 million will be funded locally. The scope of work includes track replacement, refurbishment of 72 light rail vehicles (LRVs) (15 years old); modernisation of the signalling system; and modernisation of associated rail infrastructure such as power supply, depot equipment, public address systems, and CCTV cameras. The project is expected to be completed by April 2021.

In November 2018, JICA signed an agreement with the Government of the Philippines to provide an ODA loan of up to $330 million for the MRT-3 rehabilitation. The loan has a maturity period of 40 years and a grace period of 12 years. It will carry an annual interest rate of 0.1 per cent for non-consulting services and of 0.01 per cent for consulting services.

Table 3 provides details about the recent contracts awarded for the upgradation of operational projects.

Challenges and other factors leading to slow development and delay

Non-cooperation on the part of contractors has led to delays in project completion. For instance, the DOTr terminated its contract with the previous MRT service provider, Busan Universal Rail Incorporated (BURI), because it failed to maintain a sufficient inventory of spare parts and neglected to upgrade the signalling system of MRT-3.

CRRC Dalian delayed the MRT rehabilitation project by 345 days due to glitches in power supply, incompatibility with the signalling system and weight issues. It was only in September 2018 that the company agreed to cover the costs of making adjustments to the 48 trains that it had supplied in 2016 under a $87 million contract secured in June 2014.

Further, lack of, or delay in, clearances is also a major concern for projects in the Philippines. The MRT-7 project is expected to face delay due to right-of-way acquisition issues.

The way forward

The country’s investment plans in the railway and infrastructural systems have opened up prospects for several market players. However, the fact that the funding is coming mainly from China and Japan may restrict the entry of other market players into the sector. However, to ensure the financial viability of the projects, the country has been cautious in awarding contracts to foreign players.