Optimism grows over rail policy

PUBLISHED : Monday, 28 December, 1998, 12:00am
UPDATED : Monday, 28 December, 1998, 12:00am

Guangzhou will officially complete its first underground railway - an 18.5 kilometre route - today, five years to the day construction on the city's proposed four-line underground mass transit system started.

Meanwhile, 100km to the south, Shenzhen officials will break ground on another subway, consisting of two lines running 14.8km.

The two projects - along with Beijing's announced intention to accelerate spending on subways and light-rail systems, as part of its overall plans to increase fixed-asset investment - suggest that the State Council may ease its urban rail moratorium and give the green light to a handful of the more than 20 proposed metro projects throughout the country.

'We are hoping that some other projects will get approval soon,' Siemens project manager for the Guangzhou subway, Jurgen Shulze, said. 'I would not be surprised to see a couple go ahead.' He is hoping for formal State Development and Planning Commission (SDPC) approval for a third line for the Shanghai Metro and a second line for the Guangzhou Metro, although station construction for the latter project began in October.

Other cities that could receive Beijing's nod are Wuhan, Qingdao and Dalian.

Project financing will be crucial. All mainland metro projects now under consideration - with the notable exception of Shenzhen, which is to finance the city's 7.7 billion yuan (about HK$7.2 billion) subway itself - require some form of debt financing.

In the past, the mainland has relied on foreign government concessionary financing to support construction and outfitting of subways.

Of the 12.71 billion yuan cost of Guangzhou's line, 37 per cent was financed by Germany, the United States, Britain and Japan.

Germany's Kreditanstalt fur Wideraufbau provided the lion's share - 716 million deutschemarks (about HK$3.29 billion) - to enable a consortium of German manufacturers led by Siemens to win a range of contracts to supply systems, rolling stock and machinery.

However, the SDPC has indicated that foreign-currency debt exposure on future urban rail projects is to be reduced through greater use of locally made equipment.

Beijing also will pay attention to overall cost controls. That is due primarily to massive overruns for Guangzhou's subway, where the construction bill more than doubled from the original six billion yuan, making the line the most costly civil works project undertaken in Guangdong province.

Guangzhou authorities said the subway would begin shakedown operations on February 16, and full operations would commence on June 28.


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