Frontier Friday: Panama, Japan Reach $2.6 Billion Agreement to Fund Construction of Panama Metro’s Third Line
Benefitting at least 500,000, new rail is Panama’s largest project since the Canal expansion and the first Japanese monorail in the Americas
The Republic of Panama announced in April the signing of what is being billed a “historic” agreement with the Government of Japan–a multi-billion dollar deal to fund the construction of Line 3 of Panama’s Metro. To date, the confirmed agreement stands as the “largest project in Panama since the expansion of the Panama Canal”. The monorail system will be the first to use Japanese technology in the Americas.
In addition to funding the Metro’s construction, the agreement includes non-refundable technical cooperation up to PAB/USD $35 million to hire a project manager.
“The funding granted today by Japan is a recognition of Panama’s credibility, stability, and strength” President Juan Carlos Varela said in the joint press conference with the Prime Minister of Japan Shinzo Abë.
This project, Verala explained, will benefit “hundreds of thousands of Panamanians that have to commute every day to the west side of Panama City”, and will allow the country to highlight Japanese technology to others in the Latin America region.
President Varela and Japanese Prime Minister Abe oversaw the exchange of notes and documentation between the Japanese International Cooperation Agency (JICA) on behalf of the Government of Japan and Vice Minister of Foreign Affairs, Luis Miguel Hincapie, Minister of Economy and Finance, Dulcidio De La Guardia, and President of the Metro, Roberto Roy on behalf of the Government of Panama.
The funding granted by JICA is “a loan with soft financial terms and conditions”. With a 20-year term, it includes 14 years of amortization, 6 years of a grace period and 3 years for disbursement. A company tasked with the execution of the project will be chosen through a process of international public bidding.
According to the Government, Japan is implementing this project as a measure to support developing countries in climate change. in November 2015, Japan announced its “Actions for Cool Earth 2.0,” a designated program to support activities against climate change for 1.3 billion yen, funded by public and private partners. Japan will continue to cooperate with Panama in Project Line 3 to reduce CO2 emissions and minimize the impact of climate change.
The first phase of Line 3 will meet the demand of a projected roughly 20,000 daily commuters during a typical rush hour in the year 2020. With the second phase, Line 3 will benefit roughly 31,862 commuters in 2050. The project, according to the Panamanian government, will begin in 2017 and operations are estimated to begin late 2021.
