The Department of Transportation (DOTr) of the Philippines is set to sign two separate loan agreements, one with Japan and another with China, that would finance two major railways projects, the Metro Manila subway and the revival of the Philippines National Railways’ (PNR) Bicol Express.
The Department of Transportation will sign this month with the Japanese government a 100-billion yen (EUR 762 million) loan deal which will partly finance the construction of the country’s first underground train system. The Japanese loan is payable in 40 years with a 12 years grace period at 0.1 percent interest. This is the first tranche of the funding, as Japan has agreed to lend the entire amount needed for the project, but separate contracts will be signed for each tranche. Groundbreaking on works for the Metro Manila subway is set in the fourth quarter this year, with the subway system expected to be completed by 2025.
The Department of Transportation intends to sign by the end of the year the loan with the Chinese government for the PNR Bicol Express. The Chinese government will provide the loan based on the actual winning bidder’s contract and not on the project cost. The Chinese loan 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.