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The Japan Bank for International Cooperation (JBIC) has signed ODA loan agreements totalling ¥59.604bn (US$507mn) for two rail projects in India.

The projects will reduce traffic congestion and air pollution in Delhi and Bangalore.

The Delhi Mass Rapid Transport System Project (I) will construct a rail system, consisting of an intra-city network and connections with the suburbs, of 245km. The JBIC loan of ¥14.900bn is for the second phase of the project which will comprise five lines (three of which are extensions of existing lines) of 53km in total. The proceeds of the loan will be used for civil work in the construction of the subway corridor, procurement of the rolling stock and for consulting services.

Following completion, 2.59mn rail users per day are expected. JBIC has already provided loans totalling ¥162.751bn for the first phase of the project.

The Bangalore Metro Rail Project will construct a rail system with a total length of 33km. On completion, 1.07mn riders are expected per day.

JBIC’s loan of ¥44.704bn will be used for civil works in the construction of a subway corridor, procurement of signalling and telecommunication facilities and for consulting services.

The population of both Delhi and Bangalore has doubled over the past two decades. Yet under-developed rail systems have meant that both cities are heavily reliant on road transport. The JBIC-supported rail systems are expected to reduce traffic congestion and air pollution.

These loans form part of JBIC’s recently announced ODA Loan Package for India. The package consists of 10 loan agreements totalling ¥155.458bn, nine of which are with the Indian government and one with the Rural Electrification Corporation.