By Joyce Pangco Pa?ares

THE construction of the $503-million Northrail project will resume within the month, ending a 10-month long halt in operations stemming from claims of cost overruns and foreign exchange differences made by the Chinese contractor.

Trade Secretary Peter Favila said an agreement has been reached between the Philippine government and China National Machinery and Equipment Corp. Group on the contract price.

?[Northrail president Eduardo] Pamintuan reported during the last Cabinet meeting that they are now finalizing the negotiations they had with the contractor and that he said they will mobilize [for construction] toward the end of this month,? Favila said in a phone interview.

?He [Pamintuan] did not mention the final contract price because they still have to finalize that but the good news is that there is already a consensus.?

Last February, the Chinese company suspended work on the 32.2-kilometer Northrail project that will connect Caloocan City to Malolos City in Bulacan. It asked for an additional $299 million in the contract price.

Of the additional $299 million, almost two-thirds or $211 million was to cover foreign exchange losses, inflation and costs of the delay in construction. The remaining $88.63 million was due to variations in the original scope of work, such as the need to build viaducts instead of embankments in several areas.

Earlier the Chinese firm also blamed the government for the construction delays, citing the slow relocation of the illegal settlers who have been squatting on the Northrail track.

Pamintuan has set a May 2010 deadline for Northrail to become fully operational, Favila said.

According to Presidential Management Staff chief Cerge Remonde, Northrail is among the nine priority railway projects of the administration.

With a combined cost of P282.65 billion, the rail projects are the LRT Line 1 North Extension; LRT Line 1 South Extension from Baclaran to Bacoor; LRT Line 2 East Extension Project in Masinag, Antipolo; MRT-3 Capacity Expansion; MRT-7; the Northrail Project; Northrail-Southrail Linkage; and the Southrail Project.

?Once these railways are completed, they are expected to provide cheaper and faster alternative mode of transportation,? Remonde said.

The Northrail project will reduce travel time from Caloocan to Clark in Pampanga by an hour and 49 minutes while the Northrail-Southrail linkage will shorten travel from Caloocan City to Calamba, Laguna by an hour and 20 minutes, Remonde said.

On the other hand, travel time from Calamba to Lucena City in Quezon will be shortened from three hours and 21 minutes to one hour and 41 minutes once the Southrail project is completed while the MRT-7 is expected to cut travel time from Caloocan to North Avenue by almost an hour, Remonde said.