[photopress:tgv_train_1.jpg,full,alignright]The high-speed rail service (similar to the European TGV train shown in the illustration) connecting Beijing and Shanghai which has already been delayed, may have financing as an obstacle. This, despite the fact the Ministry of Railways claims construction is about to begin.
The offical price estimate is RMB170 billion ($21.8 billion). Like all estimates this can be exceeded and it is possible it could balloon out to RMB200 billion ($25.6 billion).
Minister of Railways Liu Zhijun said construction of the project will begin within the year and is expected to be mostly complete by 2010.
The investment is the problem. This is almost the same as expenditure as the Three Gorges Project and budget restrictions could again see the railwaydelayed again. Beijing Business Today reported that the ministry said last April it would begin laying the track by the end of last year.
Wang Ming, deputy director of the National Development and Reform Commission’s transport institute, said existing financing channels for the project, such as government investment, bank loans and bond issues, would not be enough.
He is quoted as saying, ‘Breakthroughs are needed in the financing mechanism,’ although he did not give details what those breakthrougs should be.
The 1,320-kilometer railway, which will reduce the existing 14 hours’ travel time from Beijing to Shanghai to six hours or less initially was costed at RMB130 billion ($16.6 billion) but, like all first estimates, this was substantially on the optimistic side.
According to another report by the China Business Times the State Council is yet to approve the project and the higher expenditure could also mean the project may need approval from the National People’s Congress (NPC), the country’s parliament that signs off on national budgets.
The Three Gorges Project budget also exceeded RMB200 billion and approval was sought from the NPC.
A quick reality check on the sums involved which, considering the distance involved are relatively quite small. Although we are talking about big money the cost per kilometer of railway is still far less than for similar lines in other countries. South Korea finished an express railway in 2004 at a cost of RMB300 million ($38.5 million) per kilometer. In Germany, France, Italy and Spain, the cost for similar railways was up to RMB500 million ($64 millon) per kilometer. At about RMB150 million ($19.2 million) a kilometer this Beijing-Shanghai project seems positively parsimonious.
Source: China Daily
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