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Toh Han Shih

Beijing Infrastructure Investment, which invests in and builds the capital's metro railway, says it will spend 55.87 billion yuan (HK$68.49 billion) on 10 metro rail projects from next year to 2015.
The state-run company will issue two billion yuan of one-year bonds to fund the construction of at least six metro lines, adding to its mounting debt. 
The city plans to build 660 kilometres of metro rail lines by 2015, which would account for most of Beijing's traffic flow, according to the bond prospectus. 
Beijing has 372 kilometres of metro rail lines, making up 14 lines serving an average of more than seven million passengers a day, the city government says on its website. 
The system is the world's fourth-largest urban metro rail network,  and another 296 kilometres are under construction, it adds.
 'The current scale of Beijing's metro railway lags behind the city's urban scale and the growth of cars. The number of cars in Beijing is growing very quickly, putting great pressure on the traffic,' said Wang Jiangyan, executive director of the Sustainable Transportation Centre, a non-governmental organisation in the capital city supported by the US Energy Foundation.
The prospectus says: 'Beijing's traffic congestion problem is worsening. The plan to greatly develop public transport will resolve the city's transport problems.' 
However, Beijing Infrastructure's prospectus warns that because construction will be substantial 'the company's funding gap is rather large, which may result in a sharp increase of the company's debt'.
Beijing Infrastructure's debt ballooned from 67.81 billion yuan in 2009 to 135.46 billion yuan in 2011, while its gearing ratio increased from 48.2 per cent in 2009 to 60.52 per cent on March 31, according to the prospectus. 
It said debt from 2012 to 2013 is expected to increase. 
The firm posted a net profit of 878.46 million yuan last year, but recorded a net loss of 43.71 million yuan in the first quarter of this year. As of March 31, it suffered a net operating cash outflow of 2.54 billion yuan. 
But the Beijing municipal government's financial strength is robust and capable of supporting the city's infrastructure investment, according to a report by China Chengxin International, a Chinese credit rating agency 49 per cent owned by Moody's. 
Last year, Beijing's fiscal revenue was 300.6 billion yuan, 27.7 per cent higher than 2010 and triple its fiscal revenue in 2005, according to Chengxin. The municipal government is the dominant source of funding for the city's infrastructure and as the city's main infrastructure investment arm, Beijing Infrastructure enjoys strong financial support from the city government, says Chengxin.



Beijing to pack 56b yuan into metro expansion