The Asian Development Bank (ADB) is to provide its largest infrastructure financing to the Philippines to help fund construction of a 53-kilometre passenger railway system north of the capital of Manila.
The ADB, an international development finance institution set up in 1966 to reduce poverty in Asia and the Pacific through loans, is itself based in Manila. It said the financial package of up to US$2.75 billion would help build two rail segments connecting an existing overhead train system in Manila to the Clark economic zone via the city of Malolos in Bulacan, north of the capital.
“It will be ADB’s single largest infrastructure project financing ever,” said the bank’s president, Takehiko Nakao. “The project, combined with other investments in light rail transit, metro rail transit, and subway systems, will bring back the culture of rail transport in Metro Manila,” he added.
The Malolos-Clark project is part of a government plan to build a 163-kilometre train network to connect towns north of Manila to those located south of the capital. The project is expected to be completed by 2025.
The project will provide public transport to about 342,000 passengers, who travel daily between Manila and Clark, and reduce travel time to less than one hour by rail against up to three hours by car or bus. Once completed, it will benefit up to 696,000 passengers per day from the southern city of Calamba, the ADB said.
Funding for India
This week has also seen the ADB announce the signing of an agreement to provide US$750 million equivalent in Indian rupees (INR) in long-term financing to the state-owned Indian Railway Finance Corporation (IRFC) to fund the railways track electrification project.
The non-sovereign loan will fund the modernisation programme to help India’s railway sector transition to electric power and away from dependence on fossil fuels.
Concurrently with the signing of the loan agreement, risk participation agreements were concluded with private risk participants for the project. IRFC will use the proceeds from the loan to install electric traction equipment along about 3,378 km of existing railway lines, which will enable the migration of passenger and freight traffic from diesel to electric traction.
The electrification assets will be leased to Indian Railways, the country’s national railway system, under a long-term lease agreement.
IRFC was set up in 1986 as the financing arm of Indian Railways to tap funding from domestic and international capital markets. It is fully owned by the government and is registered as a non-banking finance company. Rated at par with the sovereign, IRFC’s principal business is to raise funds from the financial markets to finance the acquisition or creation of assets, which are then leased out to Indian Railways.
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