The Asian Development Bank (ADB) said Friday it has decided to provide a 400 million US dollar loan for a modern railway transport system connecting the provinces of Henan and Shaanxi in central and northwestern China.

The project, the bank noted, will build 459 km of railway line with nine railway stations from Zhengzhou, the provincial capital of Henan, to Xi'an, the capital of Shaanxi province.

It will serve as the main corridor linking major cities and ports in the east to other major cities and ports in the west, the bank said in a statement.

It will also help link China to Central Asia and Europe.

The rail line will be the first of eight passenger-dedicated railway lines to be developed in China by 2020. It will link with the Beijing-Guangzhou, Shanghai-Xuzhou, and Beijing-Wuhan main lines on the east, and the Xi'an-Baoji-Lanzhou, Xi'an-Baoji-Chengdu, Xi'an-Ankang, and Xi'an-Yan'an main lines in the west.

Manmohan Parkash, an ADB transport specialist for railways, said given the importance of railways in China's transport system, the project will help reduce the transport constraints and high logistics costs contributing to regional economic disparities and promoting economic growth in the western region.

The project will serve to both increase the transport capacity of the Zhengzhou-Xi'an corridor and provide a cost-efficient transportation service that will benefit consumers and producers. As both Henan and Shaanxi are important tourist destinations, the project will also help to boost tourism development.

About 9.3 million people living in the project area stand to benefit from the project, with more than 90 percent of the beneficiaries living in rural areas. Six of the 17 counties in the project area are considered poor.

"Providing economic railway transportation in the unserved, less-developed, and poor areas will also help create conditions necessary for developing local resources and generating jobs and other income-generating opportunities to raise living standards," said Parkash.

ADB has provided 12 loans totaling some 2.2 billion US dollars to finance the construction of about 1,921 km of eight provincial railways operated by joint ventures with the Chinese Ministry of Railways, and 4,138 km of new lines under the four national railway projects.

The total cost of the project is estimated at 4.13 billion US dollars. The China Development Bank will provide a 1.67 billion US dollar loan, while the Ministry of Railways and Henan and Shaanxi Provincial Governments will contribute 2.06 billion US dollars toward the project's total cost.

ADB's loan comes from its ordinary capital resources and carries a 26-year term, including a grace period of six years. Interest will be determined in accordance with ADB's London Interbank Offered Rate-based lending facility.

The Ministry of Railways is the executing agency for the project, which is due for completion around December 2011.

Source: Xinhua