Ministry of Railways loosens grip on projects
Rail ministry, realising it can't fund all its plans, takes smaller share of five projects as Shanxi Energy steps in with major investments
In a further sign that the once-powerful Ministry of Railways is losing its monopolistic grip, Shanxi Energy & Transport Investment announced it would invest in rail projects where the ministry will take a smaller share than usual.
Shanxi Energy, wholly owned by the Shanxi provincial government, will invest in five rail projects with a total investment of 218.72 billion yuan (HK$267.8 billion). Shanxi Energy's share is 33.2 billion yuan, of which 12.3 billion yuan has been invested and the rest will be invested in the next three years. The firm plans to issue 1.7 billion yuan of five-year bonds to repay debt and replenish working capital.
The company, the ministry and local governments will jointly invest in these five projects, the bond prospectus says.
"The joint rail investment model breaks many years of our nation's railway being invested in by only one entity [the railways ministry], stimulated the central and local governments to be more proactive in rail investments and broadened financing channels, thus diversifying rail investment," it says.
Previously, the ministry accounted for more than 90 per cent of rail investment.
One of the five projects is the 103.8 billion yuan central and southern Shanxi coal railway, with an annual freight capacity of 200 million tonnes. Spanning 1,260 kilometres from Watang city, Shanxi province, to Rizhao port in Shandong, it is the world's longest heavy freight railway and China's first dedicated heavy freight line. Construction will begin in 2014.