Railroads News
- Investment firm to be set up for high-speed railway
Date: 25-Oct-2007 Sources: (Xinhua Online)
A giant investment vehicle will be set up before the year-end for the construction of the Beijing-Shanghai high-speed railway, sources close to the situation told China Daily.
Financial institutions, including overseas private equity investors, will be invited to join the investment firm, they said.
It could be the first time foreign capital is involved in a railway development project in the country.
A total of 110 billion yuan (14.66 billion U.S. dollars) will be raised in the first stage for registered capital and another 110 billion yuan in debt financing, including bonds and loans.
Possible investors include State-owned commercial banks, regional governments and foreign institutional investors, with the Ministry of Railways holding a significant stake in the project, the sources said.
'Negotiations are going on' to determine foreign investors, one source said.
The central and local governments used to be the only financers of railway projects but that has changed in the last few years since Shanghai Maglev Transportation Development Co Ltd was formed with seven city-based companies as investors.
The Ministry of Railways previously estimated the cost of building the railway at about 130 billion yuan (17.33 billion dollars) but has revised the figure - which now stands at 220 billion yuan (29.33 billion dollars) - because of surging real estate and material prices, according to media reports.
The new railway is designed to carry at least 80 million passengers each year, according to railway experts.
Full recovery of investment will take eight years of commercial operation, based on the estimates that the fare for a one-way trip would range between 600 and 700 yuan (80-93 dollars), compared with 1,280 yuan (170.66 dollars) for an undiscounted air ticket.
The State Council, the Chinese Cabinet, approved a feasibility study of the Beijing-Shanghai project in September after it was first proposed nearly a decade ago.
If the main construction work is started before the end of this year, the railway is expected to be operational by 2010.
When the 1,318-km project is completed, it will take passengers only about five hours to travel between the two cities, compared with 10 hours now - with the peak speed reaching 350 kmh.
Sponsor Results:
