Philippines' Aquino halts some foreign-funded work

Philippine President Benigno Aquino III is canceling or reconsidering foreign-funded infrastructure projects worth $2 billion, saying that although his country badly needs improvements, the contracts are overpriced and technically deficient.

He told The Associated Press in an interview Friday that he has canceled a Belgian-funded lake dredging project, and ordered a restudy of a Chinese-financed rail line and renegotiation of a French-funded port work.

Aquino has been reviewing infrastructure contracts signed under his predecessor, Gloria Macapagal Arroyo, whose administration has been accused of corruption. He did not accuse anyone involved in the three projects of corruption but said dredging in particular "is one of the most notorious practices for those who do corrupt practices ... so I have a tendency to be allergic to such projects."

Aquino canceled the 18.7 billion peso ($430 million) Belgian project to dredge Laguna Lake, the country's largest fresh water lake, on the southern edge of Manila.

He said the project was supposed to increase the lake's water-holding capacity to ease flooding and provide potable water to the sprawling metropolis, but that the plan was to simply move 424 million cubic feet (12 million cubic meters) of silt from one portion of the lake and dump it on another portion over three years.

"That's where it fell through," he said.

He said it would be better to spend that money for his government's 21 billion peso ($483 million) conditional cash transfer program to give financial assistance to the poorest 2.3 million Filipino families.

Aquino's year-old administration is fighting graft while wooing foreign investors to partner with his government to boost the economy and fulfill his promise of easing poverty.

"We thank the foreign governments that have been assisting us," he said. "We think it is incumbent upon us to be responsible with their kindness in ensuring that these projects are worthwhile."

He said he wanted to ensure that such projects would also allow the country to repay its loans to foreign creditors in the long run.

He said a 12 billion peso ($276 million) French project to build 72 steel roll-on-roll-off ports around the archipelago will be studied because it was overpriced by about 200 percent, and the country could do with just 36 ports.

He said the project calls for building ports in unprotected coves mostly facing the Pacific Ocean on the country's east, where most typhoons originate, thereby voiding the warranty stipulated in the contract.

He said he ordered renegotiation of a rail project linking Manila to a northern airport complex, financed by a loan from China, principally because of the cost, which has ballooned to over $1.3 billion. He said the existing plan is to have the line carry only passengers, no cargo, and for it to use narrow-gauge rail, which would cost more because such systems are no longer standard and would have to be custom-made.

Aquino, who won last year's election by a landslide on a strong anti-poverty and anti-corruption platform, did not directly accuse anyone or the companies involved in the projects.

However, contracts that have been found to be overpriced and investigated are often found to be tainted with corruption. After a Senate probe, Arroyo was forced to cancel one such contract, for a proposed Chinese-financed national broadband network.

Aquino ousted the Arroyo-appointed graft prosecutor for failing to act on complaints under the previous administration. He is expected to name a replacement soon.


Associated Press writers Jim Gomez and Hrvoje Hranjski contributed to this report.