The Market Monitor Minding the Nation's Business
Japanese contractors of railway projects funded by Japan were assured by the Department of Transportation (DOTr) that the Philippine government will honor provisions of their contract to mitigate the impact of rising fuel and material costs due to the ongoing Middle East war.
Japanese contractors recently cited possible delays in delivery of imported construction materials as well as increase in fuel expenses for diesel-powered equipment due to the Iran crisis.
DOTr Undersecretary for Railways Timothy John Batan said contracts for foreign-assisted projects contain built-in provisions that allow financial relief when prices escalate.
“The assurance that we give to our contractors is that we will implement and respect those contracts,” Batan emphasized.
He added that government is coordinating with other agencies to prevent supply shortages and address logistical hurdles.
Engineers at the Metro Manila Subway and the North-South Commuter Railway projects emphasized the heavy reliance of tunneling and depot construction on diesel-powered machinery. They reported that excavation and hauling operations consume thousands of liters of diesel daily, making them highly vulnerable to global oil price shocks. Imported materials such as steel and specialized equipment also remain sensitive to supply chain disruptions, reinforcing the need for government support mechanisms.
Despite global economic pressures, the Metro Manila Subway Project remains on track. The rail project is financed through a five-tranche loan agreement with Japan, with the Philippine government currently utilizing the fourth tranche.
Batan focused on the project’s rapid progress: “If you heard, 10 tunnel boring machines are running right now on a daily basis.” He confirmed that almost all contracts have been awarded and construction sites fully operational.
DOTr is targeting a demonstration run for the subway by the first quarter of 2028, with full passenger operations slated for 2031. Batan noted the steady release of funds from Japan reflects continued confidence in the Philippines’ capacity to deliver the project.
DOTr is also working to cushion the impact of rising oil prices on commuters. The agency has rolled out a 50% fare discount for LRT-2 and MRT-3 passengers. Train operating hours have already been extended twice, and discussions are ongoing with maintenance providers to explore further safe extensions without compromising operational safety.