China eyes US$31 billion enterprise funds for railways by 2015
|August 18, 2012||Posted by Ocean Shipping Communication China under Railway News||
CHINA’s National Development and Reform Commission (NDRC) has encouraged enterprises, including private capitals, to take positions in funding transportation rail routes and inter-city railways, with a total investment of CNY200 billion ($31 billion) in railway infrastructure projects in the 12th Five-Year Plan ending 2015.
The government’s railway infrastructure investments reached CNY148.7 billion in the first half of this year, down 38.6 per cent year on year, said a recent Ministry of Railways statistics. The data also showed investment in the first half was only 33.8 per cent of the annual CNY440 billion total investment target, which means that CNY291.3 billion more is needed by year end.
The Ministry of Railways issued the “Implementing Opinions on Encouraging and Guiding Private Capital to Invest in Railways” earlier to encourage and guide private capital to participate in the railway projects.
The NDRC said the property development should accompany construction of inter-city railways to attract investment companies and private investors to take part in the project so as to diversify the investment channels. Some centrally administrated state-owned enterprises (SOE), coordinated by China’s State-owned Assets Supervision and Administration Commission, started to penetrate the railway infrastructure construction field.
Guangdong province has opened seven railway projects worth CNY102.59 billion to public bidding, five of which are inter-city railways. Guangdong provincial government announced that private companies can participate in railway construction programmes in various ways, including proprietorship, participation, controlling partnership, BT(Build-Transfer), BOT(Build-Operate-Transfer) or PPP(Public-Private-Partnership).
Meanwhile, the NDRC is coordinating with SOEs in the railway infrastructure sector. In the past few weeks, China Railway Construction (CRCC) has signed strategic cooperation agreements with three SOEs, including China North Industries Group, ZTE, and Xinxing Cathay International Group.
In a new railway coal transport project between West Inner Mongolia and central China, the NDRC required that the Ministry of Railways should not take a controlling position, and that the CNY160 billion project be covered by provincial governments along the line and other SOEs.
To ease investment pressures in railway construction, the Ministry of Railways has engaged consultations on attracting private capital into railway infrastructure in June, but indifferent market response was seen. As the bidding process for the railway projects will be brought in line with other public works to enhance transparency, experts have cast doubts on efforts to tackle a private funding shortage that the sector is facing.
Industry insiders were quoted by China Daily as saying that reception to the offer has been indifferent because the profit share offered is too low. The railway authority in Wenzhou, one insider said, has been negotiating with entrepreneurs but so far the government is offering only 8 per cent of the profits.
Data released by the Railway Ministry showed its debt reached CNY2.43 trillion ($384 billion) by end-March with a debt ratio of 60.6 per cent. The ministry also reported a loss of CNY6.98 billion in the first quarter.
Meanwhile, fixed investment in railways was CNY89.6 billion, 48.3 per cent less than the same period last year, China Daily reported.
“With the country’s stringent monetary policies and shrinking (government) investment, more private capital will be encouraged for infrastructure projects, such as highway and railway constructions,” the report quoted Bao Yujun, president of the All-China Private Enterprise Federation, as saying.