Japan, Philippines seal PHP 8.18-B MRT-3 rehab loan

Manila and Tokyo on Wednesday signed an PHP 8.18-billion loan agreement to rehabilitate the Metro Rail Transit Line 3 (MRT-3), as the heavily used rail line continues to face technical and operational disruptions.

Foreign Affairs Secretary Ma. Theresa P. Lazaro said the funding aims to restore MRT-3 to its original “as-designed condition,” allowing for improved reliability, higher capacity and sustained performance over the long term.

“More importantly, it will translate into safer journeys, shorter travel times, and an improved commuter experience for the millions of Filipinos who rely on MRT-3 every day,” she said in prepared remarks sent to reporters.

The loan amounts to JPY 21.63 billion, or PHP 8.18 billion, with a repayment period of 40 years, including a 10-year grace period, at an interest rate of 0.8% per annum, the Japanese Embassy in Manila said in a statement.

The rehabilitation project includes the replacement of the MRT-3’s mainline rails, the overhaul of train vehicles and integration with other MRT-related projects. It also covers the procurement of bogie frames and bogie assemblies needed to improve train stability and safety.

The project also seeks to restore and upgrade key railway subsystems, including tracks, the signaling system, power supply system, overhead catenary system, communications system and various maintenance and station facilities. The rehabilitation is targeted for completion by October 2029.

“The continued rehabilitation of this vital transport system is therefore not merely an infrastructure project, but a direct investment in the productivity, safety and quality of life of our people,” Ms. Lazaro said.

Japanese Ambassador to Manila Endo Kazuya said the concessional loan would support the continued rehabilitation and maintenance of a rail system that plays a central role in Metro Manila’s daily transport needs.

“The MRT-3 has been an essential part of everyday life in Metro Manila, carrying hundreds of thousands of passengers every day,” he said. “Over time, however, aging facilities and operational challenges affected the quality of service.”

In 2023, the Philippines and Japan signed the first tranche of the loan package worth JPY 18.4 billion, which was used to begin overhauling worn-out tracks and light rail vehicles.

“Through various forms of support, Japan is proud to contribute to the advancement of the Philippine railway system,” Mr. Endo said, adding that Japanese railway experts are involved in most major rail projects in the country.

Running along a large stretch of Epifanio de los Santos Avenue (EDSA), Metro Manila’s main thoroughfare, MRT-3 serves as a critical connector in the government’s effort to integrate existing and future rail lines.

Rene S. Santiago, an international transport development consultant and former president of the Transportation Science Society of the Philippines, said faster improvements could be achieved by allowing wider use of the government’s long-idled Dalian trains.

“There can be immediate improvement if the prohibition versus Dalian trains is lifted,” he said in a Viber message.

The Philippines acquired 48 China-made Dalian train cars in 2016, but most were left unused for years due to technical compatibility issues. Only nine cars were deployed on MRT-3 last year.

Nigel Paul C. Villarete, a senior adviser on public-private partnerships at Libra Konsult, Inc., said the rehabilitation would extend the MRT-3’s lifespan and improve service reliability, but stressed the need to assess the economic impact of the investment.

“Is it worth spending money for the expected improvement?” he said via Viber. “The metric is not how much is spent, but how much the benefits amount to in economic terms.”

He also warned that the EDSA Bus Rapid Transit system, which serves a similar commuter base, could be affected without integrated transport planning.

“No one analyzes that upgrading one mode can have a negative economic effect on another when both serve the same market,” he said.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said sustained upgrades for the MRT-3 is needed for long-term viability.

“A more dependable MRT-3 reduces congestion, lowers travel time costs and strengthens the National Capital Region’s productivity,” he said in a Viber message.

He added that the government should make rehabilitation continuous and not episodic, so operational difficulties do not recur.

The MRT-3, which carries about 400,000 passengers daily, has long struggled with frequent technical glitches, limited train availability and maintenance backlogs, prompting renewed calls for urgent rehabilitation of the 27-year-old system. — Adrian H. Halili, Reporter