Railways to stay in hands of state

PUBLISHED : Wednesday, 11 May, 2011, 12:00am
UPDATED : Wednesday, 11 May, 2011, 12:00am


The Railways Ministry has ruled out privatising the heavily indebted state-owned industry amid growing concern about its financial health.

Ministry spokesman Wang Yongping also dismissed long-running calls for the restructuring of the Soviet-style industry to separate government from business, despite widespread criticism that the system gives rise to rampant graft. Former railways minister Liu Zhijun was sacked in February on suspicion of corruption linked to tenders for lucrative construction projects.

In his online chat with internet users on Monday, Wang also denied any plan for ticket price rises amid concerns that the ministry might increase fares following a rare pre-tax loss of 3.7 billion yuan (HK$4.4 billion) in the first quarter of the year.

The ministry on Friday confirmed it was slashing thr construction budget for railways infrastructure by 100 billion yuan this year.

Wang said the Beijing-Shanghai high-speed railway line would start a month of trial runs today. The 1,318-kilometre system - scheduled to go into commercial operation by the end of next month - will cut travel times between the two cities to between five and six hours.

The first-quarter data arrived amid increasing pressure on the ministry to scale back its ambitious spending programme and growing calls for the restructuring of the sector, regarded by many as the last remnant and stronghold of the Stalinist-style planned economy.

'We won't privatise the industry as railways is an important sector that concerns the lifelines of the national economy,' Wang said.

He also said 'at the moment' there was no plan to turn the state-run industry into several competitive corporations, resembling the civil aviation industry.

Under the umbrella of the Civil Aviation Administration there are a dozen state-run companies and joint-ventures competing against each other.

The mainland's whole railway industry is run and regulated by the Railways Ministry, with no separation of government from business and little transparency.

Running off the rails

After a rare pre-tax loss in the first quarter, this year's construction budget was slashed by this amount: 100b yuan