China Eximbank provides RMB 2.34 billion government concessional loan for Samal Island-Davao City Connector Project

Project narrative

On October 29, 2018, the Chinese Government and the Government of the Republic of the Philippines signed letters of exchange regarding a feasibility study for the Samal Island-Davao City Connector Project. The feasibility study was undertaken by Ove Arup & Partners Hong Kong Ltd. On November 29, 2019, the National Economic and Development Authority (NEDA) Board confirmed the Investment Coordination Committee’s approval of the Samal Island-Davao City Connector Project. Then on January 29, 2021, the Government of the Republic of the Philippines submitted a loan application to China Eximbank for the Samal Island-Davao City Connector Project. It submitted a revised application on April 26, 2021. Approximately one year later, on May 31, 2022, China Eximbank and the Government of the Republic of the Philippines signed an RMB 2,340,814,593.53 government concessional loan (GCL) agreement [NO. GCL20220060763] for the Samal Island-Davao City Connector Project. The GCL carries the following borrowing terms: a 20-year maturity, a 7-year grace period, a 2% interest rate, a 0% default (penalty) interest rate, a 0.25% commitment fee, and a 0.25% (RMB 5,852,036.48) management fee. The borrower is expected to use the GCL proceeds to finance 90% of the cost of a PHP 19,321,083,655 commercial contract [No. 20Z00008] between the Department of Public Works and Highways of the Government of the Republic of the Philippines and China Road and Bridge Corporation (CRBC), which was signed on January 4, 2021. The purpose of the Samal Island-Davao City Connector Project is to provide a permanent road linkage between Davao City and the Island Garden City of Samal, thereby reducing travel time and dependency on ferry services. The project will connect the Samal Circumferential Road in Barangay Limao, Island Garden City of Samal to Davao City in between R. Castillo-Daang Maharlika junction, crossing over Pakiputan Strait. The project has an approximate length of 3.98km which involves the construction of i) a toll-free 4-lane extradosed bridge with an approximate length of 2.8 kilometers and a width of 24.2 meters; and ii) interchanges with the existing road network, local existing junction improvements, viaducts over sections of land, and approach bridges over the marine area. China Road and Bridge Corporation (CRBC) is the contractor responsible for project implementation. An official project commencement ceremony took place on July 6, 2022. Construction has experience delays due to ongoing issues related to Right-of-Way (ROW) acquisition, which has led to a delay in geotechnical investigation activities required for the Detailed Engineering Design (DED). As of July 22, 2024, bored piling works for the land viaduct were actively underway as part of the civil works. DPWH noted that the project is progressing despite earlier right-of-way delays.