This article is part of a daily series of MegaProjects articles. If you want to know more about PPP projects with a considerable size visit our MegaProjects section. You can receive them by email on a daily basis.

A Letter of Intent for Beijing Metro Line 16 was signed on 26 November 2014 by the Beijing Municipal Government, Beijing MTR Corporation Limited (Beijing MTR) and the three shareholders of Beijing MTR.

The Letter of Intent states the mutual understanding for initialling a concession agreement for the Line 16 PPP project. According to the Letter of Intent, Beijing MTR intends to participate in the investment, operations and maintenance of Line 16. Beijing MTR is a joint venture comprising MTR Corporation Limited (49%), Beijing Capital Group Limited (49%) and Beijing Infrastructure Investment Corporation Limited (2%).

Mr Lincoln Leong, Acting Chief Executive Officer of MTR Corporation stated:

"Beijing Metro Line 16 would be Beijing MTR's fourth metro project in Beijing and as a shareholder, we are most honoured to have the opportunity to extend safe, reliable and convenient metro service to even more passengers in the capital city. Through Beijing MTR, our railway business in Beijing would extend to about 150 kilometres after Line 16 opens and we will continue to contribute to the sustainable mass transit development of Beijing."

Mr Richard Wong, General Manager of Beijing MTR commented:

"Line 16 is a north-south transport artery cutting through three major districts in Beijing This new line will bring more travel convenience to the city's metro network which is used by 10 million commuters every day."

The RMB¥49.5 billion (US$8.07 billion) Line 16 is divided into parts A and B. Part A, which accounts for about 70% of the project's capital cost, is for the line's civil construction. This work is being undertaken by Beijing Infrastructure Investment Corporation Limited. Under the PPP arrangement, Beijing MTR intends to be responsible for Part B which covers electrical and mechanical systems as well as rolling stock. Part B takes up about 30% of the project's capital cost at approximately RMB¥15 billion(US$2.445 million). MTR Corporation intends to contribute additional equity of RMB¥2.45 billion to Beijing MTR.

As part of the Letter of Intent signed, Beijing MTR intends to undertake the operations and maintenance of Line 16 for a term of 30 years. Beijing MTR and the Beijing Municipal Government have achieved a preliminary consensus for the content of the project's concession agreement and they agreed to initial the concession agreement subject to the final approval of the Beijing Municipal Government.

Beijing Metro Line 16 will stretch about 50 kilometres and feature 29 stations from Beianhe to Wanping Town, running through three major districts namely Haidian, Xicheng and Fengtai. The new line is connected to the vast metro network in the capital city through 13 interchange stations including easy access to Lines 4 and 14, which are also operated by Beijing MTR.

Construction work for Line 16 started in March 2013 and the line will open in two phases. Phase 1 is targeted to open by the end of 2016 while full line operations are expected to commence after 2017.

Beijing Metro Line 16 was one of the projects signed at the annual Beijing Hong Kong Economic Cooperation Symposium. Beijing MTR also officially signed the concession agreement for the Beijing Metro Line 14 PPP project with the Beijing Municipal Government at the same occasion.

Phase 1 of Beijing Metro Line 14 opened in May 2013 and it currently has an average weekday patronage of over 47,000. The Phase 2 East Section is targeted to serve passengers by the end of this year while full line operation is expected after 2017.