The loans would be extended by the Chinese government through the Export Import Bank of China to finance two critical projects, one of which is the Northrail project.
The BSP gave its final approval to the loan that would bankroll a portion of the Northrail project involving the construction of a 48-kilometer double narrow-gauged rail track from Bulacan to the Clark Special Economic Zone.
The track would traverse the municipalities of Malolos and Apalit in Bulacan and Apalit, Minalin, Sto. Tomas, San Fernando and Angeles in Pampanga, on to the former US air base in Clark.
The loan was denominated in US dollars with a 20-year maturity inclusive of a five-year grace period. The government would be servicing the loan at an interest rate of three percent per annum with a 0.2-percent commitment fee and a management fee equivalent to 0.2 percent of the loan amount payable upfront.
The track would run entirely on the existing right of way of the Philippine National Railways and is intended to decongest road traffic by providing an alternate passenger and cargo route via railroad.
The Chinese Eximbank loan would fund 95 percent of the project cost while the rest would be funded by the National Government.
The project had hit a snag as critics alleged that the loan agreement was disadvantageous to the country because it required hiring of Chinese contractors to undertake portions of the project.
The Chinese Eximbank is also extending a $100-million loan for the Non-Intrusive Container Inspection System project that would finance the acquisition of scanning machines for critical ports of entry.
The loan would fund the acquisition of 20 units of scanning equipment that officials said would balance the inter-port inspection load, improve inspection efficiency and lead to more equitable development efforts in key regions.
The loan would be denominated in renminbi yuan with a 20-year maturity inclusive of a five-year grace period. It would carry a two-percent annual interest with a management fee of 0.3 percent of the loan amount payable upfront.
Documents showed that the Eximbank of China is also charging an indemnity in case of loan prepayment at the rate of one percent per annum of the prepaid loan amount accruing from the prepayment date up to the repayment date of the amount.