The government paid $13.87 million or more than P790 million last year over the delayed implementation of foreign-assisted projects, the National Economic and Development Authority said over the weekend.
The amount rose from $10.7 million in commitment fees paid in 2022, NEDA said. Commitment fees are charges imposed by lenders on the unused portion of a loan. The borrower pays these fees to compensate the lender for holding the funds.
The Organization for Economic Cooperation and Development calls them commitment charges — a penalty for failing to disburse loan commitments under the overseas development assistance (ODA) program. The penalty is a fixed rate based on the unused portion of the loan. Commitment fees for the Philippines range from 0.125 percent to 0.85 percent.
The penalty increased 29.6 percent between 2022 and 2023, with the Transportation and Public Works and Highways departments accounting for most of the costs, NEDA said.
About 17 of 24 ODA-funded projects for Public Works and 11 of 17 for Transportation were delayed, according to NEDA’s Official Development Assistance Portfolio Review Report 2023.
Many ODA-funded projects were behind schedule because of procurement delays, right-of-way acquisitions and extensions beyond deadlines, NEDA said.
The Asian Development Bank-funded South Commuter Railway Project incurred the highest commitment fees in 2023 at $2.41 million, up from $790,000 in 2022.
“The project experienced delays in land acquisition due to deviations in parcellary plans and delays in procurement due to lender concurrence, as well as changes in administration and signatories,” NEDA said.
The Malolos-Clark Railway Project also contributed significantly to fees last year, totaling $1 million. Together, the two projects accounted for nearly a quarter of the total fees paid in 2023.
Two loans for the Second Health Enhancement to Address and Limit COVID-19 from the ADB and AIIB incurred $1.01 million in commitment fees despite no disbursements since their January 2022 start. The loans were canceled in 2023 to avoid more costs.
The World Bank charges the highest fee at 0.85 percent per year on an unused amount from the date charges begin to accrue, excluding the fourth anniversary of that date, and 0.75 percent per year afterward.
The Asian Development Bank charges 0.75 percent; Australia, 0.125 percent; Canada, 0.375 percent; Germany and Denmark, 0.25 percent; France and the Nordic Development Fund, 0.50 percent; and Spain, 0.15 percdent per year.
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