The governments of Japan and the Philippines have signed a landmark P112.9-billion loan agreement for the Metro Manila Subway. It is the second tranche of funding for the P488.5-billion project, which will become the country's first-ever underground railway system.
The Japanese International Cooperation Agency (JICA) will provide P370.8-billion—76 percent of the construction cost—through a loan package, with the Philippine government shouldering the remaining 24 percent or P117.7-billion. The National Economic and Development Authority (NEDA) board approved the project's budget in September 2021.
The latest second-tranche loan worth P112.9-billion is reportedly payable in 27 years. It has a grace period of 13 years, making 40 years the actual maturity date. In 2018, Japan and the Philippines signed an agreement for the first tranche of funding. The loan amount was P47.58 billion with a similar 40-year maturity date.
Japan will continue to fund the Metro Manila Subway project through JICA. Later loans will be released on an as-needed basis, depending on the project's requirements and specifications. These future loans will be subject to discussions by JICA and the Department of Transportation (DOTr), the leading implementing agency for the monumental subway project.
Apart from the generous funding, Japan's expertise in railway systems could prove beneficial to the project. Japan is globally renowned for its mastery of trains, whether bullet trains or underground transit. The country will lend its extensive experience to the Metro Manila Subway, which involves a 33.1-kilometer electromechanical system powering a 27.5-kilometer railway line.
A train depot in Valenzuela will connect to Bicutan in Taguig City and Ninoy Aquino International Airport (NAIA) Terminal 3 in Pasay City. The project also covers the physical integration of the North-South Commuter Railway (NSCR) System. That part of the project will involve the procurement of 30 trainsets and the construction of a new train depot with 17 stations, of which two of the stations will gain funding through a separate loan.