MANILA - The Philippines and Japan signed on Thursday a 253.3 billion yen (P112.9 billion) loan agreement on the second tranche funding for the construction of the Metro Manila Subway Project, the Department of Finance said.

The loan is payable in 27 years with a grace period of 13 years, for a total maturity period of 40 years, the DOF said. It follows the earlier 104.53 billion yen (about P47.58 billion or$933.73 million), which also has a 40-year total maturity period, signed in 2018.

While originally estimated to cost around P350-billion, the project’s total cost was raised to P488.48 billion, a move that was approved by the National Economic and Development Authority (NEDA) Board on Sept. 23 last year, according to the DOF.

The Department of Transportation has said that the whole project is slated for completion in 2025. In February last year, the DOTr said the subway was supposed to start partial operations by the end of 2021.

The DOTr has promised that the subway will start partial operations before the end of President Rodrigo Duterte’s term.

• Metro Manila subway to partially operate by yearend - DOTr

The underground railway will be 34 kilometers long stretching from Valenzuela to Bicutan in Taguig City and the NAIA Terminal 3 in Pasay City with 17 stations, the DOTr has said.

For the remaining three to four tranches of the total loan, the DOF said JICA or the Japan International Cooperation Agency will release the funds based on the project requirements and further discussions between JICA and the DOTr.

Finance Secretary Carlos Dominguez III, on behalf of the Philippine government, and Mr. Eigo Azukizawa, the Chief Representative of the Japan International Cooperation Agency (JICA), signed the loan accord for the Philippines’ first-ever underground railway, the DOF said.

Also present at the signing ceremony were Japanese Ambassador Kazuhiko Koshikawa and Transportation Undersecretary for Railways Timothy John Batan.

In 2019, analysts said the Philippines' target of completing the construction of its first underground railway within six years may increase the total cost.

The proposal to create the first-ever subway line in Metro Manila dates back to September 1973, based on a study by the Japan Overseas Technical Cooperation Agency, a predecessor of JICA.

The subway was proposed again in 2000 and 2014. The loan agreement was signed between Mr. Duterte and Japanese Prime Minister Shinzo Abe in 2017.

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