The Philippines and Japan have signed the JPY104.53 billion (about US$934.75 million) loan agreement for the construction of the first phase of the Metro Manila Subway Project.
The project aims to ease traffic congestion, meet fast-rising transport demand, and reduce air pollution in the country’s premier urban center.
Philippine Finance Secretary Carlos Dominguez III and Yoshio Wada, chief representative of the Japan International Cooperation Agency (JICA) signed the loan accord March 16 and formally exchanged documents on the construction of the Philippines’ first ever subway, which is one of the flagship infrastructure projects of the administration under its Build, Build, Build infrastructure program.
The loan represents the first tranche of the total loan financing requirement of JPY573.73 billion yen (about $5.31 billion or P259.6 billion) pledged by JICA for the first phase of the subway project. The total loan amount is the biggest JICA has ever committed to any country.
“I would like to thank the Japan International Cooperation Agency for its support in making this subway project a reality,” Dominguez said after the signing.
“The timely completion of this subway project will crown the aggressive infrastructure program this administration has initiated. It will likewise crown the achievements of the economic diplomacy the Duterte administration has undertaken,” he added.
Wada said: “I’d like to commend our partners for this project focusing on this important infrastructure that can be the basis for a competitive Philippine economy. It is a game-changing initiative in many ways.”
Construction of the first phase of the Metro Manila Subway will utilize cutting-edge Japanese tunneling technology and stretch from Mindanao Avenue in Quezon City to the Food Terminal Inc. (FTI) area in Taguig City, and will continue to the Ninoy Aquino International Airport (NAIA).
The project will involve an underground railway spanning about 30 kilometers and having 14 stations. The railway is expected to be completed by 2025.
The Department of Transportation (DOTr), the chief implementor of the project, has targeted the partial operation of the subway with the opening of at least three stations—Mindanao-Quirino Highway, Tandang Sora, and North Avenue—by 2022.
According to the DOF, the total project cost for the first phase of the subway project is estimated at JPY788.89 billion, which is around P356.96 billion or $7.055 billion.
Of this total project cost, 73% (JPY573.73 billion) will be funded by JICA through a time-sliced loan arrangement comprising three to four tranches, while the remaining 27%, which is about JPY215.16 billion or around P97.35 billion, will be shouldered by the Philippine government.
The loan agreement for the first tranche carries an interest rate of 0.10% per annum for non-consulting services (which involves civil works, depot, railroad, electromechanical works, power supply) and 0.01% per annum for consulting services, payable in 40 years inclusive of a 12-year grace period under the Special Terms for Economic Partnership of JICA.
For the remaining three to four tranches of the total loan, JICA will release the funds based on the project requirements and subject to further discussions between JICA and DOTr.
Preparations for the detailed engineering design and bidding documents for the project started in November 2017, finance by a grant from JICA.
In January 2018, DOTr and JICA also signed a grant-financed technical cooperation agreement to establish the Philippine Railway Institute, which is intended to support capacity building for the operation and maintenance of both current and new railway systems.
The subway system has been part of the joint National Economic and Development Authority-JICA Roadmap for Transport Infrastructure Development of Metro Manila and Its Surrounding Areas, but because of the project’s cost, Dominguez said the government considered this component of the infrastructure plan “a dream.”
“With the generous support of Japan and the fiscal space we enjoy thanks to the tax reform program, what was once considered a dream has now become a reality,” Dominguez said.
Underscoring the importance of the project, Dominguez said the government “commits to working on this project 25/8,” rather than “24/7” to ensure the project gets done at the soonest possible time.
Construction of the underground railway for the first phase of the subway project will require digging a tunnel 31.2 meters to 50 meters deep to accommodate eight-car trains that can load 2,242 passengers. The entire rolling stock consists of 152 cars or a total of 19 trains.
The first phase also includes installing electro-mechanical systems as well as building of a 28.8-hectare depot area and the Philippine Railway Institute in Barangay Ugong, Valenzuela City.
