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ADB extends $300m loan for China railway project
Updated: 2008-11-18 22:36

MANILA - The Asian Development Bank (ADB) said on Tuesday that it is extending a 300 million-US dollar loan for a railway line that will bolster economic growth in the poor western region of China.

The 820-kilometer Lanzhou-Chongqing line will be the first rail link from the northern city of Lanzhou in Gansu province, passing through Shaanxi and Sichuan provinces, to the southern city of Chongqing, a key manufacturing hub and a major exporter to the Greater Mekong Subregion, the Manila-based bank said in a statement.

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The Greater Mekong Subregion comprises Cambodia, China, Lao People's Democratic Republic, Myanmar, Thailand and Vietnam.

Nearly 17 million people live in the project area. Women and ethnic minorities will be given hiring preference to build and operate the railway line, which is estimated to cost US$8.6 billion to build.

"The project is expected to stimulate the development of industrial and natural resources and tourism, generate employment, raise living standards and help reduce poverty," said Manmohan Parkash, a transport specialist for ADB's East Asia Department.

As the financing needs are substantial, funds are being tapped from several sources. ADB is providing a 27-year loan from its ordinary capital resources. The assistance is the largest single ADB project loan for China this year.

Two of China's largest banks, China Construction Bank and the Industrial and Commercial Bank of China, will jointly provide US$4 billion in loans. The country's Ministry of Railways (MOR) and the governments of Gansu, Sichuan and Chongqing will invest US$4.3 billion as equity, with MOR contributing 55 percent of the share, and the local governments providing the rest of the equity investment.

The railway track will be capable of handling double-stack containers, raising its carrying capacity over regular lines, reducing land use, and improving energy efficiency. Over 30 railway stations will be built and state-of-the art safety equipment will be installed.

To help create a "green corridor" along the rail route, ADB will, for the first time, finance environmental protection equipment worth nearly US$12 million. A switch in traffic from roads to the new rail link will result in significant cuts in fuel consumption and emissions of harmful carbon dioxide.

The proposed railway is part of China's strategy to expand infrastructure and stimulate growth in underdeveloped interior regions of the country.

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