MANILA, Philippines - The governments of the Philippines and Japan on Friday officially signed a $2-billion loan facility for the construction of what will become the country's largest railway system.

The loan assistance, extended by the Japan International Cooperation Agency (JICA), will finance the government part of the North-South Commuter Railway Project that will run from Malolos in Bulacan to Tutuban in Manila.

According to a statement, the loan will be the "largest scale assistance ever extended by JICA to any country for a single project." The loan will be payable for 40 years, inclusive of a 10-year grace period.

It carries an interest rate of 0.10 percent per year for non-consulting services, and 0.01 percent per annum for consulting services, the statement read.

The loan agreement was signed by Finance Secretary Cesar Purisima for the Philippines and JICA chief representative Noriaki Niwa for Japan in ceremonies held in Makati on Friday.

"Japan is one of our strongest development partners in the world... Thus, we thank the government and people of Japan for the faith they have put in our economic partnership and for the investment they have put in our future," Purisima said.

For his part, Niwa noted that the project, which targets commercial operations by 2020, will help ease traffic congestion in Metro Manila.

"It's timely for the Philippines to start its railway projects to ease traffic and improve mobility of logistics and ordinary commuters," Niwa was quoted as saying in the statement.

"By helping develop Metro Manila's mass transit system, we can expand growth and develop surrounding communities," he added.

The project, being bid out under the public-private partnership (PPP) initiative, will have two phases with commercial operations targeted by year 2020.

The first phase, to be funded by the JICA official development assistance, will involve the construction of 36.7-kilometer elevated commuter railway from Malolos to Tutuban.

The second phase, to be undertaken by the PPP bid winner, will extend the line to Calamba in Laguna and farther to Legaspi, Albay an Matnog in Sorsogon. The PPP contract involves also the rehabilitation of the railway lines.

On Thursday, the PPP Center announced it has extended the deadline of bid submission for the phase two of the railway project to Feb. 1, 2016. The original deadline was set for Tuesday.

Companies that bought bid documents for the project were Ayala Corp., San Miguel Corp. and Metro Pacific Investments Corp.