• Wed
  • Jul 30, 2014
  • Updated: 9:26pm

Third parties to conduct bidding in rail projects

PUBLISHED : Tuesday, 22 November, 2011, 12:00am
UPDATED : Tuesday, 22 November, 2011, 12:00am

The central government will open bidding for multibillion-yuan railway projects through third-party platforms to make the process more competitive and reduce corruption.

Xinhua and the People's Daily yesterday said former railways minister Liu Zhijun had been linked to corruption in tendering for high-speed railway construction projects.

Before his arrest and dismissal in February, 200 rail projects worth a total of 800 billion yuan (HK$979.3 billion) were launched every year, Xinhua said.

At an internal meeting in April, vice-minister Lu Chunfang said certain people had been interfering with tenders for railway construction and services contracts, it said.

'It's natural such heavy investments in rail projects with so little transparency are a breeding ground for corruption. The dismissal of one railways minister will not be enough to solve all the problems of China's rail projects,' said a Hong Kong professor, who declined to be named.

So far, project tenders are managed by the Railways Ministry.

'The Railways Ministry seems to do everything itself, including regulation, contracting and manufacturing. It's not international practice when everything is centred at one ministry,' the professor said.

That looks set to change with third-party platforms such as the Beijing Construction Architectural Contracting Trade Centre. The Railways Ministry is negotiating with the Beijing municipal government for projects to be tendered publicly through the centre, Xinhua said.

The centre says on its website it provides tendering services, which prevents corruption and ensures quality.

'This is a step in the necessary reform of the Railways Ministry,' said James Wang Jixian, the head of the geography department at the University of Hong Kong. 'Of course, this is a good thing. It will make bidding more transparent.

'In the past, tendering was very opaque. In an open tendering system, companies not linked to the Railways Ministry stand a better chance of winning contracts.'

Previously, work on some rail projects would begin even before the tender was launched, Xinhua said. For example, a tender was announced for a Nanjing railway station in December 2008, but state-owned China Railway Group had already begun piling work at the site in January that year.

For the Beijing-Shanghai high-speed railway, at least 4.94 billion yuan of questionable tendering was uncovered by the National Audit Office.

'I'm not optimistic about such reforms of the Railways Ministry. I'm not saying there is no hope for the reforms, but it'll be difficult to implement them,' Masterlink Securities analyst James Chung said.

In 2005 and 2010, the central government tried various reforms to attract private investment in railway projects but met little success, with private funds accounting for only 1 per cent of the country's rail funding last year, Chung said.

Unless the industry further opened up to international competition, a few state-owned enterprises would continue to dominate the railways market, the professor said.

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