Philippines Secures PHP 92.8 Billion Loan from JICA to Fund Two Flagship Infrastructure Projects

The Philippine government and the Japan International Cooperation Agency (JICA) signed two loan agreements funding the construction of two flagship infrastructure projects of the Marcos Jr. administration: the Dalton Pass East Alignment Road Project and the Metro Manila Subway. 

The loan, amounting to a total of JPY 250 billion (PHP 92.8 billion), comes in the form of official development assistance (ODA) with an interest rate of 0.3 percent per annum, repayable in 40 years with a 10-year grace period. 

Dalton Pass East Alignment Road Project 

Of the JPY 250 billion (PHP 92.8 billion) loan from JICA, a total of JPY 100 billion (Php 37 billion) will be allocated for the construction of the Dalton Pass East Alignment Road. 

The said project will connect the city of San Jose in Nueva Ecija to the municipality of Aritao in Nueva Vizcaya, serving as a new and alternative route to the current Dalton Pass. The Dalton Pass East Alignment Road will be beneficial in many ways as JICA’s evaluation report found the following: 

• The existing Dalton Pass is “extremely vulnerable” to natural disasters such as earthquakes and typhoons, causing it to be frequently closed to traffic over the years.  
• With steep uphills and downhills, the existing Dalton Pass is also “extremely difficult” to traverse. In 2017, 541 accidents were recorded, with 118 severe cases and 21 fatal ones. 
• The existing Dalton Pass is the only arterial road linking northern Luzon to Metro Manila and has already reached its traffic volume capacity in 2019. 

The Japanese Embassy in Manila and the Department of Public Works and Highways (DPWH) welcome this as a key step in the “economic revitalization” of Luzon and the improvement of transport and mobility systems within the Cagayan Valley region. The Dalton Pass East Alignment Road project is expected to be completed by March 2032. 

Metro Manila Subway Project  

The new loan from JICA will also help fund the Metro Manila Subway Project, with PHP 55.7 billion specifically designated for the third tranche to support the first phase of the subway’s construction.  

JICA loaned the first tranche of funding for the subway in March 2018, amounting to PHP 47.58 billion. The second tranche of funding was issued in February 2022, amounting to PHP 112.87 billion. 

Construction on the Metro Manila Subway Project began in 2019. Initially, the goal was to have all 15 stations of the 36-kilometer subway fully operational by 2025. With trains capable of reaching speeds of up to 80 kilometers per hour, the subway would link Quirino Highway and the Ninoy Aquino International Airport (NAIA) Terminal 3 in Pasay City through a 30-minute commute. But land acquisition and right of way issues, payment delays, and the COVID-19 pandemic hindered progress on the project.  

Excavations for the East Valenzuela–Quirino Highway tunnel began in January 2023 with completion set for December 2023. Meanwhile, excavations for the North Avenue–Tandang Sora tunnel were set to begin in July 2023, with completion anticipated by July 2024. The final tunnel, spanning from Tandang Sora to Quirino Highway, was scheduled for completion by August 2025. 

However, as of March 2024, excavations have only begun for the North Avenue tunnel. Full operations for the subway are now projected for 2029. 

Right-of-way Issues

Securing the right-of-way for properties affected by the construction of the Metro Manila Subway has been a significant challenge for the project.  

DOTr Secretary Jaime Bautista asserted that the government has already attained 55 percent of the necessary right-of-way for the project. DOTR Undersecretary for Railways Jeremy Regino added that the government will persist in negotiating for right-of-way with affected property owners, and that resorting to petitions for expropriation in court remains a last option. 

The subway’s right-of-way issues hindered the DOTr from awarding the remaining civil works contract packages for the subway project last year. Secretary Bautista noted that “[the DOTr has] to settle the right-of-way issue first because when we enter into a contract with a contractor and there are still issues, we might not be able to begin the construction on time.” The transportation secretary added that the DOTr plans to award Contract Packages (CP) 105 for the Kalayaan Avenue and Bonifacio Global City stations, CP 108 for the Lawton and Senate-DepEd stations, and CP 109 for the NAIA Terminal 3 station, by the third quarter of 2024.