Business Shipping and Transportation China eyes $31B private funds for railways
China eyes $31B private funds for railways
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- Published on Tuesday, 31 July 2012 00:00
By A Web design Company
BEIJING –– China is targeting private capital as the government seeks 200 billion yuan ($31 billion) in investments in railway infrastructure projects in its 12th Five-Year Plan ending in 2015 as state funding for the projects shrink, according to a report citing an official of the country’s top planning body.
The Economic Information Daily reported that the National Development and Reform Commission said 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,
China Daily said in a report the Ministry of Railways had issued “Implementing Opinions on Encouraging and Guiding Private Capital to Invest in Railways” to encourage and guide private capital to participate in the railway projects.
The government’s railway infrastructure investments reached 148.7 billion yuan in the first half of this year, down 38.6 percent from the same period last year, said a Ministry of Railways statistics released recently. The data also showed investment in the first half was only 33.8 percent of the planned 440 billion yuan total investment.
The China Daily, quoting a ministry statement, said a daily average of 6.04 million passengers used the railways in the first 15 days of July, the ministry said in a statement on its website. It said the largest number traveled on July 7, when 6.5 million passengers took trains, according to the statement.
It said most of the passengers were students heading for their hometowns for summer vacation, as well as people taking breaks from work to visit friends and relatives.
Railway authorities have arranged additional trains and stepped up measures to ensure safe transportation, the statement said.
As the bidding process for the railway projects will be brought into line with other public works to boost transparency, experts have cast doubts on efforts to tackle a private funding shortage facing the sector.
The announcement followed a statement published online by the ministry the previous Friday to encourage more private investment. But industry insiders were quoted by China Daily as saying reception to the offer has been cool because the profit share being 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 percent of the profits.
Data released by the ministry showed its debt reached 2.43 trillion yuan ($384 billion) by end-March with a debt ratio of 60.6 percent. The ministry also reported a loss of 6.98 billion yuan in the first quarter.
Meanwhile, fixed investment in railways was 89.6 billion yuan, 48.3 percent 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 construction,” the report quoted Bao Yujun, president of the All-China Private Enterprise Federation, as saying.
In fact, he said, private capital is already involved in railway construction, the report added. Bao explained that a 624-kilometer coal transport line partially funded by Xinjiang Guanghui Industry Investment Group, a private firm, began construction in late March.
