Despite the tension over territorial rights issues in the West Philippine Sea, the Philippine government is not yet giving up on its negotiation with Chinese partners to secure loan financing for the first phase of the 565-kilometer PNR South Long Haul Project.

"Negotiations are ongoing, and I don't think (the West Philippine Sea issue) was a factor. It is more on how interested the Chinese government is in the project. It is a matter of how badly or enthusiastically they would want to pursue the project," PNR General Manager Jeremy S. Regino said in an interview with reporters on Tuesday.

However, Regino pointed out that the Departments of Transportation or DoTR and Finance or DoF are also preparing a contingency plan in case the discussion fails anew.

"The DoTr and DoF are studying and evaluating other options for financial assistance as well as a hybrid approach where the government will partially fund the project along with an Official Development Assistance from other partners," he added.

In July last year, barely a month into the Marcos administration, the DoTr disclosed that the Chinese government withdrew funding for three multi-billion railway deals under the Duterte administration's massive "Build, Build, Build" flagship program.

The financing covers contracts for the first package of the PNR South Long Haul Project worth P142 billion; the Subic-Clark Railway Project worth P50.03 billion; and the first phase of the Mindanao Railway Project worth P82 billion.

"If you remember, the reason why the negotiations stalled in the previous administration (was because of the) discussion on the rate of interest, had there been an agreement on the rate of interest before, it would have been done by now," Regino said.

Nonetheless, Regino said that the government is now targeting to close a loan financing deal with just a 2.5 percent interest rate, slightly lower than the 3 percent rate previously proposed by China.

The initial phase of the PNR project covers a 380-kilometer railway from Banlic in Calamba, Laguna to Daraga, Albay.

The project's Design-Build contract was signed by the DoTr with the Joint Venture of China Railway Group Ltd., China Railway No. 3 Engineering Group Co., Ltd., and China Railway Engineering Consulting Group Co., Ltd. in 2022.