Japan, China to finance major rail projects

March 07, 2018

The Department of Transportation (DOTr) is set to sign  two separate loan agreements, one with Japan and another with China, that would finance two major railways projects, the P365-billion Metro Manila subway and the P170-billion revival of the Philippine National Railways’ (PNR) Bicol Express.

DOTr will sign this month with the Japanese government  a 100-billion yen  loan deal which will  partly finance the construction of the country’s first underground train system.

TJ Batan, DOTr undersecretary for railways,  said Japan has agreed to lend the entire amount needed for the project but is financing in on on time-slice or staggered terms. The initial amount to be released is pegged at 100 billion yen.

“We are not signing the loan for the entire thing upfront,” said Batan.

Groundbreaking on  the Metro Manila subway is set in the fourth quarter this year with  three stations expected to start operation by 2021. 

The subway system, which is expected to be competed by 2025, will start from Mindanao avenue in Quezon City and will end at the Ninoy Aquino International Airport.

The loan to be provided by  Japan is payable in 40 years and 12 years grace at  0.1 percent interest.

The DOTr is targeting to sign by the end of the year another loan, this time with the Chinese government, for the  PNR Bicol Express.

The procurement will be conducted upfront because the Chinese government will give the loan based on the actual winning bidder’s contract and not on the project cost.

DOTr earlier said  the loan with China is payable in 20 years at 2 percent interest per annum.

The government will revive the PNR’s Bicol Express with the reconstruction of the railway system from Manila to Bicol.