The government of Panama announced yesterday the signing of an historic agreement with the Government of Japan valued at $2.6bn to fund the construction of Line 3 of Panama’s Metro, the largest project in Panama since the expansion of the Panama Canal.
It will benefit hundreds of thousands of Panamanians every day and will allow us to showcase Japanese technology to everyone in the region– Panamanian President Juan Carlos Varela
The monorail system will be the first to use Japanese technology in the Americas, and the agreement comes as Japan lobbies hard to export its maglev rail system to the US.
The agreement, in addition to funding the Metro construction, will include technical cooperation worth up to $350,000 to hire a project manager for the scheme.
"This [is a] great project," said Panamanian President Juan Carlos Varela in a joint press conference with Japan’s Prime Minister Shinzo Abe.
"It will benefit hundreds of thousands of Panamanians that have to commute every day to the west side of Panama City, and will allow us to showcase Japanese technology to everyone in the region."
Panama called the funding granted by the Japanese International Cooperation Agency (JICA) "a loan with soft financial terms and conditions".
It has a 20-year term, which includes 14 years of amortization, six years of grace period and three years for disbursement.
The interest rate will be 6-month LIBOR JPY minus 1.05%, with an initial fee of 0.20%.
The project manager, to be selected by international competition, will oversee the preliminary design of Line 3 and manage its overall execution, including the integration of the monorail system with the fourth bridge over the Panama Canal.
Line 3 will be 26.75km long with 14 passenger stations.
Panama expects the first phase of Line 3 to carry 20 thousand commuters daily in rush hour by 2020. With the second phase Line 3 will benefit 31,862 commuters in 2050. The project will begin in 2017 and its operations are estimated to begin in the end of 2021.
Image: Panamanian President Juan Carlos Varela, left, seals the deal with Japan’s Prime Minister Shinzo Abe in Panama on 20 April 2016 (Government of Panama)