Financing may be an obstacle for the already delayed high-speed rail service
connecting Beijing and Shanghai, but the Ministry of Railways claims
construction is about to begin.
The high-profile rail project has an
official price tag of 170 billion yuan ($21.8 billion), but could exceed 200
billion yuan ($25.6 billion) according to experts. Construction of the project
will begin within the year and is expected to be mostly complete by 2010, said
Minister of Railways Liu Zhijun on Wednesday.
But insiders said
investment may fall short of the sky-high budget, which is almost the same as
expenditure on the Three Gorges Project, and could again see the railway fall
behind schedule. The ministry said last April it would begin laying the track by
the end of last year, the Beijing Business Today reported.
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.
"Breakthroughs are needed in the financing mechanism," Wang was
quoted as saying, without giving details.
The 1,320-kilometer railway,
which will reduce the existing 14 hours' travel time from Beijing to Shanghai to
five, had an initial price tag of 130 billion yuan ($16.6 billion), but this
later increased to a maximum of 200 billion yuan.
The State Council is
yet to approve the project, suggesting the ambitious plan is stalled for
budgetary reasons, the report said.
But 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, according to another report by the China Business
Times.
The Three Gorges Project budget also exceeded 200 billion yuan and
approval was sought from the NPC.
With an increased budget of 200
billion, the cost per kilometer of railway will increase to about 150 million
yuan ($19.2 million), still far less than for similar lines in other countries.
South Korea finished an express railway in 2004 at a cost of 300 million
yuan ($38.5 million) per kilometer. In Germany, France, Italy and Spain, the
cost for similar railways was up to 500 million yuan ($64 millon) per
kilometer.
The ministry, which seems to be aware of the funds shortage,
made it clear last year the project could include financing from both private
and foreign investors.
Wang Zhiguo, vice-minister of railways, also said
last month that the State Council had "in principle" approved the proposal that
insurance companies be invited to finance the project. Negotiations between the
ministry and insurance companies are in progress.
It was reported in
November that the national social security fund is likely to invest in the
railway as well.
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