3-4 OCTOBER 2005
NIGHTMARE AT NORTH RAIL
Cost of Resettling 40,000 Families Deliberately Hidden

by ALECKS P. PABICO


Our latest report is a two-part story on the problems besetting the relocation of 40,000 families to make way for the North Rail project. The relocation of all these people twice the population of San Juan, Metro Manila is expected to cost at least P6.6 billion. But it is a hidden expense, as it was not added to the total project cost. It is also not clear where the money to fund the resettlement will come from.

The former head of the North Luzon Railways Corp., the government company that is rebuilding the North Rail, says that the resettlement costs were deliberately kept hidden to make it appear that the project cost is low.

Last week, the Senate began hearings on the North Rail project. So far, the testimonies have focused on the allegedly onerous and illegal provisions of the North Rail contract. Little attention has been paid to the fact that rehabilitating the 80-kilometer North Rail means evicting more than 200,000 people.

The National Housing Authority says that it has only P1.6 billion for resettlement. The rest will have to be funded from a loan from yet another government corporation, the National Development Company, which will in turn be paid by the annual appropriations to NHA from the national budget.

The second part of this report focuses on the problems at the resettlement site: corruption, inefficiency and a failure to inform and consult with affected families. Many of the evicted families now face starvation as they have been relocated to places far from where they work and where there are few jobs available.

The NHA has also been accused of selling overpriced construction materials and of getting into sweetheart contracts with landowners, local governments and site developers.




Informal settlers along the abandoned PNR railways in Bgy. Tabing Ilog in Marilao are among some 13,000 Bulacan families being relocated to give way to the multi-million-dollar North Rail project. [Photos by Alecks P. Pabico]
IMAGINE uprooting 40,000 families twice the entire population of the municipality of San Juan, Metro Manila and relocating them elsewhere.

By any stretch of the imagination, this would be a logistical and sociological nightmare. The financial cost alone would also be staggering. This is exactly what is happening in the government program to relocate those who will be displaced by the North Rail Project. The Housing and Urban Development Coordinating Council (HUDCC) estimates that the government needs to shell out at least P6.6 billion in resettlement costs, but it is not clear where this money is going to come from.

The Senate began last week hearings on the controversial North Rail project, which envisions the rehabilitation of the north line of the old Philippine National Railways (PNR). So far the hearings have focused on the allegedly onerous and illegal provisions of the North Rail contract, inked by the government with a Chinese company.

Little attention has been given to the fact that rebuilding and extending the 80-kilometer railway, a project intended to spur economic growth in Central and Northern Luzon, also means evicting more than 200,000 poor people who live alongside the railroad tracks. This would make it the biggest and costliest resettlement project ever undertaken by the Philippine government.

Critics say that the North Rail contract, which costs $503 million or roughly P28 billion at the current exchange rate, is overpriced. More than 80 percent of this will be funded by a loan from the Export-Import Bank of China.

But this price tag does not include the cost of relocation, which will be borne by the Philippine government through the National Housing Authority (NHA) and by the families who will be evicted. A former railway official said that the resettlement expenses were deliberately hidden so these would not reflect on the overall, already bloated, project cost.

Total Cost of the North Rail Project
COST ITEMS
COST IN MILLION (US$)
PERCENTAGE (%)
Civil and Track Works
280.90
55.84
Right of Way
17.50
3.48
Signaling and Communications
29.84
5.93
Rolling Stock
87.79
17.45
Other Costs (Project Management, Taxes, Others)
87.02
17.30
TOTAL
503.05
100.00

In 2004, President Arroyo signed Administrative Order 111, which designated the NHA as the lead agency for implementing the rail-related resettlement program. The problem, however, is that the NHA does not have that kind of money.

In March, NHA General Manager Federico Laxa said in a public hearing conducted by the joint Senate committees on finance, local government, and urban planning, housing and resettlement, that his agency has only P1.6 billion for the North Rail relocation and resettlement program.

In addition, it got an interest-free loan of P100 million from the North Luzon Railways Corporation (NLRC), the government corporation that will construct, operate and maintain the North Rail. Future funds will be "bridge financed" from a loan to the NHA from the National Development Company which will be paid from NHA's annual appropriations from the government budget.

Laxa rued the fact that the relocation component was not inputted into the project cost. Former NLRC chief operating officer, Rene Santiago, an international transport consultant, said the resettlement expenses were deliberately hidden.

"Hindi yan nakalimutan. Intentionally itinago, (These were not forgotten, they were intentionally kept secret)" Santiago said. "Now they are forcing NHA to budget it from their appropriations so it will bring down North Rail's cost, to make it appear that the project cost is low."

Apart from financing difficulties, the North Rail relocation program is beset by the same problems that have hounded government relocation projects elsewhere: corruption, inefficiency, the lack of a comprehensive relocation program, and a general disregard for the views and the needs of the poor people who are facing eviction.



Unfinished houses are a common sight in Towerville as relocatees, uprooted from their livelihood sources, have taken to selling the alloted construction materials to feed their hungry families.
The government has not undertaken a resettlement project on this scale since it attempted in the 1970s, at the height of martial law, to uproot 180,000 people from the politically volatile Tondo Foreshore slum in order to build a new international container port. Because of protests from the slumdwellers, who were supported by Catholic and Protestant clergy, the Marcos government backed down and allowed most of the residents to stay either in the area or nearby, instead of being relocated to a site 40 to 45 kilometers away.

Affected families and NGO workers interviewed for this report say that the North Rail relocation is plagued by the absence of a comprehensive relocation action plan and a lack of transparency on the part of project authorities. They say information is provided to the affected families only on a piecemeal and need-to-know basis.

The families are also being herded to resettlement sites that lack basic facilities such as water supply, electricity, drainage and sewage systems, and health centers and schools. They are uprooted from their sources of income without the alternate jobs being provided.

For this reason, the relocated families have found it difficult to pay for the high monthly amortization of their lots in the resettlement sites, which cost between P100,000 and P125,000, payable within 25-30 years at a six-percent interest.

In not a few cases, evicted families moved out of their relocation sites to settle elsewhere in search of jobs, even as many have now taken to selling the construction materials allotted to them to build their houses just to feed their hungry families. Children have also been getting sick especially with the onset of the rainy season.

So far, 7,297 families from Metro Manila and 1,401 families from Bulacan have already been relocated. It is expected that the clearing of Bulacan up to Malolos of some 11,477 families will be completed before the end of October.

All these families are affected by the first section of Phase I of the Project the construction of the 32-kilometer double-track, narrow-gauge rail line from Caloocan to Malolos. Another 20,000 families in Pampanga will have to be relocated when the construction of the line to the Diosdado Macapagal International Airport inside the Clark Special Economic Zone gets underway.

Proposed Financing Scheme for the Resettlement of Families Affected by the North Rail Project in Bulacan Segment
MUNICIPALITY/CITY
REQUIRED NO. OF DEVELOPED HOMELOTS
TOTAL COST PER MUNICIPALITY/CITY (MILLION PESOS)
Municipality of Meycauayan
3,341
334.10
Municipality of Marilao
1,911
191.10
Municipality of Bocaue
2,086
208.60
Municipality of Balagtas
1,141
114.10
Municipality of Guiguinto
1,703
170.30
City of Malolos
2,696
269.60
TOTAL
12,878
1,287.80
SOURCE: National Housing Authority

Vice President Noli de Castro, on whom the heavy burden of the North Rail relocation has been assigned by virtue of his being HUDCC chair, is confident the project is on track. De Castro's masa appeal has helped made it easier for the Arroyo administration to evict the railway squatters with minimal protests.



Towerville relocatees say life at the resettlement has become even more miserable that you can't find someone from whom you can borrow even only five pesos.
The North Rail is a major component of the Strong Republic Transport System, the flagship infrastructure project of the Arroyo administration. The big-ticket venture is envisioned to provide a fast and reliable mass transport service for passengers and goods between Metro Manila and Central and Northern Luzon in order to spur the growth and development of these areas.

To ensure habitable and adequate relocation sites, de Castro said he personally visits the resettlement sites "almost every week to monitor the progress and to make sure that the well-being of the families is being looked after."

But it seems de Castro has been making promises the NHA cannot fulfill.

Today, NGOs working in the relocation sites say that all the resettled families are appealing for are jobs and livelihood assistance. "May pabahay nga kami rito, wala naman kaming hanapbuhay? Paano kami mabuhay? (It's true we have houses here, but what good are these if we don't have jobs? How do we survive?)" asks Nelina Rendora, 43, a mother of four who has chosen to be relocated at the Towerville resettlement site in San Jose del Monte City, Bulacan.

In addition, unscrupulous private individuals and public officials have been milking the relocation for every opportunity to engage in corruption. Residents say kickbacks and payoffs are extracted at almost every stage of the resettlement project. They point to the purchase by the NHA of overvalued real estate used for the relocation sites. This, they say, allowed well-connected property owners to make a killing with the connivance of NHA bureaucrats.

Evicted families say they have also been forced to use the assistance money they had been provided to buy overpriced construction materials from suppliers favored by the NHA. In addition, contractors and land developers in the good graces of local government officials have been awarded fat contracts to develop relocation sites. with additional reporting by Luz Rimban


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RELATED DOCUMENTS

Administrative Order No. 111

Urban Development Housing Act

Committee Report No. 30 of the Joint Senate Committees on Urban Planning, Housing and Resettlement; Finance; and Local Government on the North Rail Project

Memorandum of Agreement between North Luzon Railways Corp. (NLRC), the Province of Bulacan, and Alto Projekt Asia Inc. to Develop a Housing and Agro-industrial Estate for Relocatees (Note: The MOA has already been amended three times.)

Commission on Audit's Comments and Recommendations Culled from the 2003 Audit Report on the NLRC

Current Zonal Values of Real Properties in Valenzuela and the Bulacan Municipalities of Meycauayan, Bocaue, Marilao, Balagtas, Malolos, and Guiguinto

Adverse Claim on Two Parcels of Land Within Bgy. Lambakin Relocation Site

Executive Order of Valenzuela Mayor Sherwin Gatchalian to Evict Relocatees at Bgy. Bignay Site Being Developed by Baque Corp.

U.P. Law Center Legal, Economic, Financial, and Technical Opinion on the North Rail Contract and the Buyer Credit Loan Agreement

RELEVANT LINKS

Description of North Rail Project from the BCDA Website

Erap City

Office of Vice President Noli de Castro

Housing and Urban Development Coordinating Council

National Housing Authority

House of Representatives

Senate of the Philippines

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