Chinese trains may soon run on British rails

PUBLISHED : Wednesday, 19 January, 2011, 12:00am
UPDATED : Wednesday, 19 January, 2011, 12:00am

China is close to selling its first trains to Britain in four deals worth more than GBP500 million (HK$6.17 billion).

If successful, they will be the first major purchases of Chinese rolling stock in western Europe and the first time that Chinese trains run on railways in the UK, which introduced the world's first passenger trains in the early 19th century.

'We're in final negotiations for some projects. Fingers crossed, we'll see Chinese rolling stock enter the [western] European market in 2012,' said David Shipley, managing director of the British railway advisory firm CSRE, the European representative of CSR Corporation and China CNR Corporation, the two leading Chinese rolling stock manufacturers.

CSRE is negotiating for CSR, which is listed in Hong Kong and Shanghai, to sell or lease three of its train types to private UK rail operators in four projects worth a total of more than GBP500 million, Shipley said.

One of the private UK rail operators, Alliance Rail Holdings, is negotiating the lease of 17 Polaris trains from CSR for GBP200 million, Alliance managing director Ian Yeowart said.

'CSR has been the only supplier we've been talking to in detail for 15 months,' Yeowart said.

'We like the look of Polaris and it fits our requirements. [The deal] is tantalisingly close but we're not quite there yet. I'd like to see trains ordered by summer.'

The deal is pending approval by the UK Office of Rail Regulation and Alliance's parent, Arriva Group, which is owned by the German national rail company, Deutsche Bahn.

The Polaris trains can travel at 200km/h. CSR also hopes to sell its 120km/h Pulsar trains and 160km/h Pacesetter trains to Britain, said Shipley, who declined to give more details about potential UK buyers.

Shipley said the success of some of the deals hinge on obtaining financing from Chinese banks.

'It's very difficult in the UK to raise money for new rolling stock projects,' he said.

CSRE is arranging financing through a mix of European and Chinese banks for some of the deals, Shipley said.

The financing will be insured by China Export & Credit Insurance Corporation (Sinosure), he added. According to its website, Sinosure is China's only insurance firm specialising in export credit insurance 'mandated in accordance with the Chinese government's policies to promote Chinese exports'.

China has already won modest deals to supply freight trains to eastern Europe. In April last year, CNR signed a 700 million yuan (HK$824 million) contract to supply electric freight locomotives to Belarus, according to a report in the Railway Gazette trade journal.

In October, CNR signed a joint venture with the Polish national freight operator PKP Cargo to assemble cargo wagons in Poland using Chinese parts.