RoW bottlenecks seen weighing on Philippine infrastructure momentum

By Ashley Erika O. Jose, Reporter 

RIGHT-OF-WAY (RoW) challenges continue to delay major transport projects and push back completion timelines, the Asian Development Bank (ADB) said, highlighting the risk to the Philippines’ infrastructure investment momentum.

“One significant problem (in securing funding and completing projects) I would say, is right-of-way acquisition, particularly in densely populated areas,” ADB Country Director for the Philippines Andrew Jeffries told BusinessWorld in a recent interview.

“Land valuation disputes are inevitable and the resettlement of people can be very complex and involves many different local government units,” he added.

RoW challenges are not unique to the Philippines, as many projects in developing countries face similar issues, Mr. Jeffries said.

He noted that major infrastructure projects have also been hit by supply chain disruptions triggered by events such as the pandemic and the ongoing Middle East war.

“All of a sudden, work had to stop. Input costs rose dramatically, and there were supply chain issues, like what we are facing right now with the Middle East crisis. All of a sudden fuel costs translate into other costs and become much higher. These are all big challenges faced by large transport projects,” he said.

The Department of Transportation (DoTr) has revised timelines for key transport projects, particularly rail systems, with many now targeted for partial operations following delays mainly due to RoW issues.

In particular, the Transportation department cited RoW as the reason for delays in the construction of the North-South Commuter Railway (NSCR), particularly in the northern section of the project.

NSCR, a 147-kilometer line, is one of the DoTr’s flagship projects and is seen to boost mobility and economic activity in Luzon.

The NSCR’s northern section is expected to be operational by 2028, while the southern section is targeted for completion by 2031. The entire NSCR is expected to be fully operational by late 2031 or early 2032, later than the original target completion date of 2027. 

The P488-billion Metro Manila Subway project’s RoW is now at 90.8%, with the project expected to be completed by 2032 from the initial target of 2025.

At the same time, the DoTr is still addressing issues that arose after the Department of Justice (DoJ) issued a legal opinion on RoW acquisition rules for big-ticket projects. The DoJ’s legal opinion held that compensation rules set by development partners for persons displaced by foreign-funded projects apply only if the loan agreement was signed prior to the effectivity of the Right-of-Way Act (Republic Act No. 10752).

Workarounds to the legal opinion will be necessary to ensure that big-ticket railway projects are not delayed beyond 2028, the DoTr has said.

The DoJ also said that DoTr must fully comply with the RoW Act, which requires payment to landowners only after properties are cleared of structures. This contrasts with multilateral development banks’ rules, which mandate that borrowers fully compensate landowners before displacement.

“RoW remains as one of the main challenges in completing projects, more particularly with transport projects, or even in the process of securing funding thereof,” Nigel Paul C. Villarete, senior adviser on public-private partnerships (PPPs) at Libra Konsult, Inc., said in a Viber message to BusinessWorld.

The government should address the issue by factoring in added costs from delays caused by RoW challenges into project design, development, and cost estimates, Mr. Villarete said.

“Our problem sometimes is that we just see RoW issues as problems but not as costs, when in fact, it is one of the major causes of cost overruns which eventually results in delays and thus, further costs in terms of missed opportunities,” Mr. Villarete said.

“A road project delayed for two years will actually redound to economic costs brought about by my unrealized economic benefits which were contributory to the overall national economic growth. So, we need to realize that RoW problems and delays will redound to lower national economic growth.”

For Rene S. Santiago, an international consultant on transport development and former president of the Transportation Science Society of the Philippines, the government should start and replicate efforts done by countries like Japan and Canada to address its RoW challenges.

Japan, for instance, has implemented innovative solutions by integrating urban planning legislation and aligning transport planning with zoning and land use, according to information from Japan International Cooperation Agency.

Meanwhile, ADB’s Mr. Jeffries said transport projects continue to face challenges beyond RoW issues, including funding constraints, as the government recalibrates its strategy toward greater reliance on PPP investments rather than loans.

“There are also budget constraints and fiscal pressures, you know. The government is keeping a very close eye on public debt levels and how to bring the private sector into some of these investments as opposed to just borrowing,” he said.

At present, ADB’s portfolio of projects under construction and for implementation in the Philippines stood at $12.5 billion, majority of these or about $7 billion is for transport projects.

Mr. Jeffries said the ADB is willing to fund one of the government’s flagship projects, the Mindanao Railway Project, which is still in limbo after lack of funding.

The ADB is ready to provide official development assistance loans or provide PPP advisory services for the Mindanao rail project, he said.