The Philippines’ Department of Transportation signed a 142-billion-peso ($2.76 billion) contract with a Chinese group to build the first phase of the 565km Philippine National Railways (PNR) Bicol project.

In a statement on January 18, the department said the design-build contract for the China-funded project was sealed with the venture of China Railway Group Ltd, China Railway No 3 Engineering Group Co Ltd, and China Railway Engineering Consulting Group Co Ltd.

This will cover the design, construction and electromechanical works of the first 380km stretch (Banlic, Calamba to Daraga, Albay) of PNR Bicol, which will link Metro Manila to the southern Luzon provinces of Sorsogon and Batangas.

“Once fully operational, it will cut travel time between Metro Manila and Bicol from the current 12 hours by road to as short as four hours,” the department said.

According to the department, the contract with the Chinese venture will cover four provinces and 39 cities and municipalities. This will include the construction of 23 stations, 230 bridges, 10 passenger tunnels, and a 70ha depot in San Pablo, Laguna.

The department said the PNR Bicol passenger trains will run at a speed of up to 160km/h, while freight trains will run at a speed of up to 100km/h.

In his official Facebook account, Chinese ambassador to the Philippines Huang Xilian called the signing “another milestone for China-Philippines cooperation and friendship”.

“The $2.8 billion railway, one of the flagship projects under President [Rodrigo] Duterte’s ‘Build Build Build’ programme, is so far the highest-funded [government-to-government] project between our two countries,” he said.

Apart from the PNR Bicol, also known as the PNR South Long Haul, Chinese loans are also being tapped for the Mindanao Railway project and Subic Clark Railway.

China is the third-largest source of official development assistance loans for railway projects after Japan and the Asian Development Bank, according to the government list of flagship infrastructure projects.