Funding for separate projects to extend two of Metro Manila’s major overhead train lines has received regulatory approval from the central bank, helping pave the way for construction to finally start soon.
The Bangko Sentral ng Pilipinas (BSP) has approved a concessional loan from the Japan International Cooperation Agency (Jica) that would fund the extension of the Light Rail Transit (LRT) lines 1 and 2, which are two priority projects of the Aquino administration.
“The rates we got were very concessional,” BSP Governor Amando M. Tetangco Jr. said, explaining that the terms of the loan were extremely friendly for the borrower, the Philippine government.
The loan worth 43.252 billion yen or approximately $436.24 million, will partly fund the capacity expansion of the LRT line 1 through the purchase of new train cars. Buying the new cars that can accommodate more people is the government’s part in the LRT line 1’s extension.
The loan is payable over 40 years, inclusive of a 10-year grace period, and carries an interest rate of 0.02 percent a year. “Global interest rates have really come down. This is highly concessional and favorable to the government,” Tetangco said.
The construction of new tracks that will extend the train line from its current southernmost station of Baclaran to Bacoor, Cavite, will done by the private sector.
When the government’s and the private sector’s contributions are combined, the LRT line 1 project will be worth roughly P60 billion—making it the most expensive piece of infrastructure in the government’s current pipeline.
The long-delayed project is also the most expensive public-private partnership (PPP) that the government wants to bid out.
Bidding to find the private sector contractor to take on the project failed earlier this year because only one firm, Manuel V. Pangilinan’s Metro Pacific Investments Corp. (MPIC), submitted a technical and financial proposal.
BSP’s Tetangco said part of the loan would also fund the extension of the LRT line 2 from its eastern station of Santolan, Marikina, to the Masinag Junction in Antipolo.
“(These projects) will mitigate traffic congestion and pollution in Metro Manila,” Tetangco said.