PRESIDENT Ferdinand Marcos Jr. abolished the North Luzon Railways Corporation (NorthRail) as the government-owned firm is “no longer achieving the objectives and purpose for which it was designed and created.”

The President, through Executive Secretary Lucas Bersamin, issued on Thursday, Oct. 19, 2023 Memorandum Order 17, containing the abolition of NorthRail.

In his order, the President said the Governance Commission for Government-owned and -controlled Corporations (GCG) determined that Northrail was “not producing desired outcomes,” “no longer achieving the objectives and purpose for which it was designed and created,” and “is not cost efficient and does not generate the level of social, physical and economic returns vis-a-vis the resource inputs.

Northrail, registered with the Securities and Exchange Commission in 1995, was created as a wholly owned subsidiary of the Bases Conversion and Development Authority (BCDA) to develop, construct, operate, and manage a railroad system to serve Metro Manila, Central Luzon, and Northern Luzon.

The state-owned firm was created to implement the Northrail project, which seeks to connect Caloocan City to Malolos, Bulacan.

The project, however, failed following the termination of contracts that the firm entered into due to several issues, such as raising necessary funds.

The National Economic and Development Authority Board approved the North-South Commuter Railway Project in 2015. It was to be financed through official development assistance from Japan, effectively rendering the Northrail project terminated.

With this, the President directed the BCDA board of directors to act as the administrator and liquidator of NorthRail and settle its liabilities, including the payment of separation incentive pay to affected officials and personnel.

The BCDA directors, with the help of the Department of Transportation (DOTr), shall undertake the necessary steps in liquidating NorthRail’s assets and assist in the winding up of its corporate affairs.

They shall also conduct an inventory of all NorthRail’s existing programs and projects and either terminate or transfer them to concerned government agencies and a list of NorthRail’s assets and liabilities and how to dispose of or settle them.

They must also formulate a Change Management Plan for affected stakeholders.

The BCDA directors shall conduct an inventory of all pending cases brought by and against NorthRail and formulate the appropriate actions to resolve them.

The Office of the Government Corporate Counsel shall provide the necessary legal assistance to the BCDA in this endeavor.

The President also tasked the BCDA directors to surrender to the Commission on Audit (CoA) original copies of NorthRail’s corporate books of account and financial records.

All affected personnel and officials of NORTHRAIL may avail of the following separation benefits: first 20 years: 1.00 x Monthly Basic Salary (MBS) x No. of years; 20 years and 1 day to 30 years: 1.25 x MBS x No. of years; and 30 years and 1 day and above: 1.50 x MBS x No. of years.

The separation pay shall be charged against NorthRail’s available corporate funds.