Japan OKs P19-B funding for LRT extension
MANILA - Japan has approved some P19 billion worth of loans that will be used to fund the capacity enhancement of mass transit systems in Metro Manila, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
The loan was granted by the Japan International Cooperation Agency (Jica) to the Philippines in the amount of ¥43.252 billion, or about $43.252 million, and will go to the Mass Transit System Project of the Department of Transportation and Communications.
The funding will be used to expand the capacity of Light Rail Transit Lines 1 and 2, and extend their reach from Baclaran to Bacoor, Cavite, and from Santolan to Masinag, Antipolo. The expansion of the transit system aims to mitigate traffic congestion and air pollution in Metro Manila.
“These are infrastructure loans. We should emphasize that. It is a foreign loan that is designed to fund an infrastructure project,” BSP Governor Amando M. Tetangco Jr. said.
The loan has already gone through final approval.
It has 40 years maturity, inclusive of 10 years grace period.
It is also subject to an interest rate of 0.2 percent per annum for non-consulting services and a 0.01-percent interest per annum for consulting services. Its commitment fee is 0.1 percent of the total amount of the disbursed portion of the loan.
Tetangco said the Philippines managed to secure the loan at very minimal rates because of the low-interest environment seen around the world, with Japan’s rates close to zero. The central bank chief said these low rates are favorable to borrowers.
The other part of the funding in the expansion of the transit systems in the nation’s capital will come from the private sector.
“This is official development assistance,” Tetangco said.
Jica is a Japanese administrative agency that promotes international cooperation and development of the Japanese and global economy by extending financial assistance for the development, recovery and stability of developing nations.