MALACAÑANG is prepared to invoke executive privilege, if need be, when the Senate investigates the $503 million NorthRail project after China National Machinery and Equipment Group (CNMEG) "backed out" and threatened to sue the government for $299 million in cost overruns.

Deputy presidential spokeswoman Lorelei Fajardo said that President Arroyo is committed to ensure the proper implementation of the project and any concerns about alleged overpricing will be dealt with.

Fajardo's statements could be seen in the light of the fact that the Supreme Court upheld its invocation of executive privilege in refusing to make a full disclosure on the terms of the Japan-Philippines Economic Partnership Agreement last Wednesday and the high court's decision last March 23 to uphold the decision of former Planning Secretary Romulo Neri to invoke the same privilege regarding his discussions with President Arroyo on the overpriced national broadband project.

Sen. Richard Gordon proposed the reopening of the NorthRail probe after CNMEG reportedly backed out from the project.

Gordon said there should be a closure on the issue adding that the project might not be worth pursuing given the controversies and huge amount of money already spent even before the project is implemented.

Former Senate President Frank Drilon had called on the government to terminate the grossly-overpriced project and go after the people responsible for "the greatest train robbery in history."

Drilon said the administration has already spent P5.4 billion but "has nothing to show for it."

He said as a result of the graft-laden project, the Philippine government has paid P1 million in loan interests alone since September of 2004 for a total of P1 billion.

The 80-km railway project, a flagship program of the Arroyo administration, would link the northern flank of Metro Manila with the Diosdado Macapagal International Airport at Clark in Pampanga at a cost of $1.475 billion.

Senate minority leader Aquilino Pimentel has said the multi-billion-peso project is faltering because the government awarded it to CNMEG without public bidding and non-compliance with other government rules.

Pimentel challenged the government to inform Congress and the public about the real status of the project due to conflicting statements emanating from the Executive branch.

He noted that Edgardo Pamintuan, president of North Luzon Railways Corp. (NLRC), at first reported that CNMEG had pulled out from the project.

Later, he said Pamintuan issued a statement that CNMEG only suspended work on the project, with some 150 Chinese workers having returned to China.

Pimentel also assailed the administration for lack of transparency when it sought Chinese loans.

He recalled that after the loan agreement was signed on Feb. 26, 2004 in Beijing, the Senate expressed reservation over the project in view of the findings of the UP College of Law that the agreement suffered from serious flaws, and that government officials who had a hand in the deal could be held liable for the mistakes.