March 16, 2019
Claims that China will be charging high interest rates to fund the Kaliwa Dam project are “misleading,” the Finance department said on Friday.
In a statement, Finance Secretary Carlos Dominguez 3rd said the Duterte government had obtained better loan terms compared to those secured by the Arroyo administration for another water project.
He said the New Centennial Water Source-Kaliwa Dam Project would be built with a $211-million loan from China that came with an interest rate of 2 percent per annum.
The administration, he added, was also able to negotiate a commitment fee of only 0.3 percent of the undisbursed amount of the loan.
Moreover, the Finance chief said they made sure that the government would not pay a pre-payment penalty fee.
Dominguez has been criticized for pushing the Kaliwa project, which has yet to be granted an environmental permit, amid a severe water crisis in Metro Manila.
Some observers claim that the water shortage is artificial and that building the dam would drive the Philippines deeper into a debt trap.
“The terms of the loan obtained by the Duterte administration are at least 30 percent better than the loan secured by the Arroyo administration and wholeheartedly accepted by the Aquino administration,” Dominguez said.
In particular, he said the Arroyo administration was able secure a $116.6-million loan from China for the Angat Water Utilization and Aqueduct Improvement Project Phase II at an interest rate of 3 percent per annum.
The Angat dam project was completed in 2012 during the administration of then President Benigno Aquino 3rd, who thanked China for extending the loan for the project, the Cabinet official
While both the Kaliwa and Angat loans have maturity periods of 20 years, the grace period for former is seven years compared to the shorter five years for the Angat project, Dominguez said.
The aqueduct project also included a pre-payment indemnity of 1 percent per annum accrued on the prepaid loan, he claimed.
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