Beijing taps investors to pay for new subway line

PUBLISHED : Monday, 27 October, 2003, 12:00am
UPDATED : Monday, 27 October, 2003, 12:00am

Beijing wants to raise at least five billion yuan (HK$4.69 billion) from foreign investors and domestic private businesses to help finance the city's 10th subway line.

Gao Yi, head of fund-raising at the government-owned Beijing Metro Group, said it would set up ventures with private and foreign investors to invest in and operate the first-phase of the rail line, expected to cost 15.3 billion yuan.

The line, with a feeder line to the 2008 Olympic Village, has attracted the interest of MTR Corp, which is looking to invest in rail systems outside Hong Kong to boost earnings growth.

MTR said it was conducting a risk assessment study of the project. The study covers areas such as transport pricing in Beijing and maintenance costs.

'This project is a very attractive one, as due to the Beijing Olympic Games, the new subway line may bring us considerable profit,' an MTR spokeswoman said.

'We are also seeking co-operation with Shenzhen's and Shanghai's railway operators,' she said.

The Beijing city government would invest 10 billion yuan in the project, with funds raised from bank loans, bond sales and foreign loans, according to mainland media.

Mr Gao said researchers were working out expected passenger traffic to help the city government determine how much money needed to be raised from foreign investors and the mainland private sector.

'The specific policy for overseas investors' repayment in the project is still under discussion by the government and Beijing Subway Group,' he said.

Employing a public-private partnership approach, the government will invest in the comparatively low-profit infrastructure part of the project.

Domestic and foreign investors are expected to contribute 30 to 40 per cent of the overall investment.

Construction for the first phase of the 30.5km subway line has begun and is scheduled to be completed in 2007.