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April 12, 2024

Transformative infrastructure: Philippines secures P92 billion JICA loan for Manila Subway, road initiatives

The Philippine government has secured an additional loan of P92 billion (approximately 250 billion yen) from the Japan International Cooperation Agency (JICA) to support the development of the Metro Manila Subway Project (MMSP) and the Dalton Pass East Alignment Road Project (DPEAR).

The Department of Finance revealed that Finance Secretary Ralph Recto finalized the loan agreements, which include P55 billion (around 150 billion yen) for the MMSP’s Phase 1 third tranche and P37 billion (about 100 billion yen) for the DPEAR Project’s initial tranche. These projects are integral to the “Build, Better, More” initiative aimed at enhancing the country’s infrastructure.

During the loan agreement signing on March 26, 2024, Recto highlighted the significant economic benefits of infrastructure investment, noting a return of two pesos and thirty centavos for every peso spent.

The MMSP Phase 1, with a total cost of P488.48 billion, marks the Philippines’ first underground rail system and is one of the largest undertakings in the current administration’s infrastructure program. This project will establish a 33-kilometer railway with 17 stations stretching from Valenzuela City to Bicutan and including a branch to NAIA Terminal 3 in Parañaque City.

Set to commence operations in 2029, the subway is expected to cut travel time between Valenzuela and NAIA from 90 to just 35 minutes and serve up to 519,000 passengers daily. Funding for MMSP Phase 1 includes two previous loans from JICA, amounting to P38.81 billion in March 2018 and P94.05 billion in February 2022.

On the other hand, the DPEAR project aims to construct a 23-kilometer road that will serve as an alternative to the 77-kilometer Dalton Pass, featuring a 6.12-kilometer tunnel and 10 bridges totaling 5.83 kilometers in length, thereby improving connectivity between Nueva Ecija, Nueva Vizcaya, and the Cagayan Valley Region.

The JICA loans offer favorable terms, including an interest rate of 0.3% per annum for non-consulting services and 0.2% per annum for consulting services, a 40-year repayment period, and a 10-year grace period.