World Bank cuts $85M for Cebu BRT, drops Packages 2 and 3

CEBU CITY, Philippines — After more than a decade of delays, the World Bank has stripped $84.9 million from the Cebu Bus Rapid Transit (CBRT) project and scrapped most of its remaining infrastructure, leaving only a 2.38-kilometer corridor to move forward before the loan expires in September.

The decision, contained in the World Bank’s restructuring paper, formalizes the partial cancellation requested by the Philippine government earlier this year and sharply reduces the scope of what remains of Cebu’s flagship mass transport project.

READ: Cebu BRT loan cuts no cause for alarm, eyes PPP – Archival

The canceled financing consists of the entire $25-million Clean Technology Fund (CTF) grant and $59.9 million from the International Bank for Reconstruction and Development (IBRD) loan, leaving about $56.1 million in World Bank financing available for the project.

The restructuring follows years of implementation delays that prompted both the Philippine government and the World Bank to conclude that extending the loan beyond its Sept. 30, 2026, closing date would no longer prove practical.

Packages 2 and 3 removed

The restructuring permanently removes Civil Works Packages 2 and 3 from the World Bank-funded project.

READ: CBRT SRP realignment bucked after heated City Council debate

Package 2 covered the construction of 10.8 kilometers of dedicated trunk bus lanes from the South Road Properties (SRP) to the Cebu South Bus Terminal along N. Bacalso Avenue and from the Capitol to IT Park, together with terminals at SRP and IT Park and a depot.

Package 3 included 18 kilometers of feeder routes, bus stops, and terminals serving Talamban and Talisay.

Although engineers had already completed the detailed designs, the World Bank said procurement never started because right-of-way acquisition and resettlement continued to lag behind schedule, making it impossible to finish the works before the loan expires.

The restructuring paper also removes funding for traffic management infrastructure, including the installation of the Area Traffic Control (ATC) system and Intelligent Transport System (ITS), retaining only consultancy work for the functional design.

Likewise dropped from the project are several urban mobility studies, BRT financing studies, transport demand assessments, and institutional, environmental, and social studies.

READ: PH moves to cancel $85 million in Cebu BRT loans

Infrastructure budget cut

The restructuring dramatically shrinks the project’s infrastructure budget.

Component 1, which originally carried a total project cost of $255 million, now falls to $47.4 million after the removal of Packages 2 and 3.

The remaining funding will finance the completion of Civil Works Package 1, limited right-of-way activities already undertaken, engineering design, and project supervision.

Package 1 covers the 2.38-kilometer dedicated BRT corridor between the Cebu South Bus Terminal and the Capitol.

According to the World Bank, the corridor reached 97.7 percent completion by October 2025, although the Capitol Station still requires redesign while rectification works remain ongoing.

READ: World Bank eyes over $3-B project pipeline for Philippines

Eleven years, little progress

The restructuring paper paints a bleak picture of the project’s overall implementation.

The World Bank maintained an “Unsatisfactory” rating for both implementation progress and progress toward achieving the project’s development objectives, citing prolonged procurement delays, staffing shortages, repeated violations of loan covenants, and persistent right-of-way issues.

In the 11 years since the project became effective, only about 29 percent, or $40.62 million, of the combined World Bank loans had been disbursed before the partial cancellation took effect.

The French government’s financing also saw limited utilization, with only about €3 million disbursed from the original €50.89 million loan extended through Agence Française de Développement.

The World Bank said the Department of Transportation paused implementation following the change in national administration in 2016. Although the government recommitted to the project in 2018, implementation later encountered disruptions from the COVID-19 pandemic, procurement setbacks, staffing turnover, delayed consultant recruitment, and inadequate budget releases.

Right-of-way delays

The lender also cited minimal progress in land acquisition and resettlement.

Of the 891 affected lots and structures, only 52 had received full compensation, while 27 received partial payment.

None of the 508 affected businesses had received compensation, while the government had yet to acquire a relocation site for 57 informal settler families, according to the restructuring paper.

The unresolved right-of-way issues ultimately prevented bidding for Packages 2 and 3.

Interim operations continue

Despite a downsized project scope, the government still plans to launch interim Cebu BRT operations before its loan closes this September.

To achieve this, the Department of Transportation (DOTr) intends to utilize the completed Package 1 corridor alongside the existing Cibus fleet currently operating between IL Corso in the South Road Properties (SRP) and IT Park.

The World Bank, however, cautioned that this reduced scope will likely yield only modest improvements. Many essential BRT components, including the larger trunk corridors and an intelligent traffic management system, have been cut from the bank-financed phase.

PPP eyed after funding cut

In response to the scaled-back funding, Mayor Nestor Archival earlier revealed that the government is already exploring a public-private partnership (PPP) to complete the remaining portions of the long-delayed transit project.

While he has yet to receive the full details of the restructuring, Archival confirmed that the focus has officially shifted toward securing private-sector participation.

“The direction now is to look for takers under PPP. That’s what we will look into,” he said.

Despite the loss of World Bank financing, the mayor emphasized that this does not spell the end for Cebu’s first bus rapid transit system.

“If it gets canceled, then probably the lender saw that it cannot be implemented now,” Archival said. “What we will do is find a way to bring back funding.”

Local debate continues

The project’s restructuring arrives amid friction at City Hall. Just days prior, the Cebu City Council adopted a resolution rejecting the DOTr’s proposed SRP realignment, demanding instead that the project stick to its original Bulacao-to-Talamban corridor.

While DOTr officials assured the council that the original alignment remains part of the long-term plan, they admitted that severe right-of-way constraints and the fast-approaching September 2026 loan expiration forced the government to prioritize sections that can realistically be finished on time.

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