The Asian Development Bank (ADB) said on Wednesday that it would lend 1 billion U.S. dollars for a railway construction program in southwest China.

The program aims to provide cleaner, safer, and more energy efficient railway services in southwest China's Guangxi Zhuang Autonomous Region, provinces of Guizhou, Sichuan and Yunnan, and Chongqing Municipality. The program will support the government's plan of 25 billion U.S. dollars in seven years to expand and improve railway services in the above-mentioned regions.

It is the first program of its kind to target the promotion of energy efficiency, environmental sustainability and improved safety through ADB's transport operations and in China's transport sector, the Manila-based bank said on its website.

It is also the first investment in China's transport sector to use the multitranche funding mode, which has major advantages, including flexibility for both the government and ADB, and the linking of the release of funds to project readiness.

"The program will deliver broad benefits including reduced economic losses and lower energy bills for the government, reduced carbon emissions, safer trips for the public, faster more cost-effective freight services in underdeveloped areas," said Manmohan Parkash, Principal Transport Specialist in ADB's East Asia Department.

It will also create new employment opportunities and increase integration of the southwest with its neighbors, including Vietnam and the Greater Mekong Subregion, he said.

The program is a part of China's economic stimulus package, announced in November 2008, in response to the impacts of the global financial crisis.

Program funds will be used to purchase equipment to improve safety and energy efficiency, and to protect the environment, including a moving train fault detection system, and smart electronic devices that can help reduce power consumption and carbon emissions, the bank said.

The multitranche facility will provide just over 30 percent of the full program investment of 3.24 billion U.S. dollars, with the government contributing about 2.24 billion U.S. dollars.

In the first tranche, ADB will provide a 300 million U.S. dollars of loan with a term of 26 years, including a grace period of six years.