No.383issue(2012.07.27) |
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BASIS POINT-China's Suzhou Rail seeks 20 bln yuan loan for light-rail lineSuzhou Rail Transit Co Ltd is seeking a Rmb20bn (US$3.14bn) loan for the construction of light-rail lines, sources said. The deal, led by China Development Bank Suzhou, has a tenor of seven years and offers a margin of 100% of the PBOC rate, according to a source. Major Chinese banks have been invited to a bank meeting this week, when more details on the loan will be introduced. Proceeds are for the construction of extended sections of Lines 2 and 4 on the light-rail network, sources said. According to local media, Suzhou Rail Transit obtained an Rmb8.4bn loan from a 10-bank group in 2009 for light-rail Line 2 and a Rmb6.2bn loan from a seven-bank group in 2008 for light-rail Line 1. The Suzhou branches of Agricultural Bank of China , Bank of China , China Development Bank and Industrial & Commercial Bank of China were mandated lead arrangers on the 2009 loan, while Bank of Communications , China Construction Bank , China Merchants Bank , China Minsheng Bank , China Everbright Bank and Huaxia Bank joined as lenders. CDB Suzhou led the 2008 loan, which was joined by AgBank, BOC Jiangsu, BOC Suzhou, Bocomm, China Everbright Bank and ICBC, local media reported. Suzhou Rail Transit is directly controlled by the Suzhou municipal government. It manages the construction, investment and development of rail transit projects in the city in Jiangsu province.
Iran-China Railroad – Tajikistan’s Latest Mega-Distraction?With work essentially stopped at Rahmon’s marquee ‘project of the century’, including thousands of layoffs of construction workers who might be wishing they had gone to Russia this summer, time has arrived for Tajikistan to come up with a replacement nation-saving mega project. Perhaps this is why we are again hearing talk of a plan to build a railroad linking the country with China and Iran. The line would run from Iran’s existing spur to Herat to southern Tajikistan, assumedly near the US-funded bridge at Nizhny Pyanzh, then proceed to Yavan, through the Rasht Valley to Kyrgyzstan’s Alai Valley, cross the Irkeshtam Pass and descend to Kashgar, in southwestern Chinese Xingjiang. The project has been kicking around for years, though somehow has never gotten off the ground. Perhaps that somehow was the likely multi-billion dollar tab that no one is committed to picking up. Or the technical complications of building the line at high altitudes and through narrow river valleys. Or the fact that China, Iran, and the Central Asian republics all use different rail gauges. Or that existing lines already link Iran and Central Asia. And that Afghanistan is a war zone. And occasionally, so is the Rasht Valley. All that aside, Iran and Tajikistan have started talking up the project again of late. Kyrgyz officials expressed no interest in the project as recently as June, and rightly so, it would only pass through a remote and sparsely populated valley. Then this month, Iran’s ambassador in Bishkek recently announced that Iran would pay for the stretch through Kyrgyzstan, which was swayed by the no-risk proposition. While any charity is generous, this stretch is short and almost entirely flat. The Tajik line would also not connect to Kyrgyzstan’s own nation-saving mega project, a rail line that would connect China and Uzbekistan across the Torugart Pass, north of Irkeshtam across an impenetrable range. Kyrgyzstan has bandied that rail project around since at least the mid-90s, though Atambayev and Babanov have all but staked the country’s economic future on the idea. The two repeatedly insisted after repeated results-free trips to Beijing that ‘every issue related to the project is solved, except financing’. When talking about two threads of iron to cost Kyrgyzstan about 40% of a year’s GDP, financing is really the issue, is it not? Thus, Kyrgyzstan is left with two bad options: rails for minerals, or rails for tolls. Either Chinese enterprises would get privileged access to mineral concessions, or would be permitted to run the railroad to recoup the costs. Both options bring serious political risks for Bishkek, as I have argued in the past. Tajikistan would have to offer China a similar deal. Like when Dushanbe unceremoniously gave away 1,100 sq km of mountainous territory to China in 2011, or when leases agricultural land to Chinese farming enterprises, Dushanbe will have to test its people’s patience yet again. Iran may be willing to pay for Kyrgyzstan to play nice, but the initial ascent from China and the descent through the Rasht Valley will be by far the most costly aspects of the project. Iranian media already acknowledges this, and provides some decidedly low-ball figures. The Rogun stoppage shows just how far Tajikistan can go with this projects without massive foreign backing, which is, not far. Heavily-sanctioned Iran can’t possibly have the cash lying around for a huge up-front outlay. Even if China could be enticed to cover the cost, the whole plan would run up against the US policy of ‘No Silk Roads Lead to Persia’. Despite the possibility that this particular railroad might be more valuable to Afghanistan than alternatives options to expand Uzbek or Turkmen spurs into Afghan territory, it seems quite likely that the US will veto any progress while US troops are on the ground. And after they are gone, will the investment be protected? Iran is supposedly still in the feasibility study phase – a process that in this part of the world means “study just how great an idea this is”. Rail investment best addresses the need to move heavy, often low-value-added goods, in large bulk, and without a tight time schedule. Marble in Balkh? Oil in Faryab? Afghanistan’s now-legendary Angyak copper deposit would be far removed from the line. Realistic studies of the rail lines viability would have to measure the actual probability of success of such nascent ventures. They would also have to measure them against the next-best alternative, not against the status quo. In this case, Iran and China have an existing rail link through Turkmenistan, Uzbekistan, and Kazakhstan. Cutting across Afghanistan and Tajikistan would save some time. But containerized trucks can already do the same thing, and without the need to switch wheels three times. Without greatly increased demand for freight services between the countries involved, such a rail line may not make economic sense. But as Rogun shows, nation-saving mega projects are bigger than economics. They’re about national mobilization, national pride, and, perhaps, national distraction.
China to form high-speed railway network by 2015BEIJING, July 25 (Xinhua) -- China will have established a high-speed railway network covering almost all its cities with a population of more than 500,000 by 2015, according to a latest official program. The State Council, or China's cabinet, late Tuesday issued a plan for building a comprehensive transportation network during the 2011-2015 period. According to the plan, China should basically complete the construction of a high-speed railway network with a total operating length of more than 40,000 kilometers by the end of 2015. Analysts expect China's railway equipment manufacturing industry will see rapid growth. "We forecast the country's railway construction will accelerate and the investment in the construction will also speed up in the next few years," according to Sinolink Securities Co., a Chinese brokerage company. China will initially establish a comprehensive transportation network with a total length of 4.9 million kilometers, mainly including railways, roads and inland waterways, according to the plan.
Rail network to be finished by 2015
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China to put 200b yuan in railway construction by 2015The railway infrastructure projects are expected to attract 200 billion yuan ($31 billion) investments, including private capitals, during the 12th Five-Year Plan (2011-15) period, Economic Information Daily reported Monday citing an official at the National Development and Reform Commission. The property development model is encouraged by the NDRC to attract enterprises, including private capitals, join in the construction of inter-city railways, so as to diversify the investment channels. Some centrally administrated State-owned Enterprises, coordinated by the State-owned Assets Supervision and Administration Commission, set their footprints in the railway infrastructure construction field. The Ministry of Railways issued Implementing Opinions on Encouraging and Guiding Private Capital to Invest in Railways to encourage and guide the private capital participate the railways construction projects. The railway infrastructure investments was 148.7 billion yuan, dropped 38.6 percent in the first half, comparing with the same period of last year, said a Ministry of Railways statistic released recently. The statistic also showed the investment in the first half is only 33.8 percent of the planned 440 billion yuan total investment.
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Railway infrastructure investment decreasesChina's railway infrastructure investment decreased 38.6 percent year-on-year to 148.71 billion yuan ($23.33 billion) in the first half of the year, according to data released by the Ministry of Railways. Despite being sluggish since June 2011, railway infrastructure investment has been revived at a slow pace from the start of this year, the ministry said. In June, the ministry's investment on railway construction hit 43.23 billion yuan, a record high in 2012 and 28 percent higher than in the previous month. However, experts have doubts about the profitability of the newly established high-speed railway projects. "Some high-speed railway projects have been suffering losses due to high construction costs, the lack of a comprehensive network and insufficient market demand," Zhao Jian, a professor at Beijing Jiaotong University, was quoted by the 21st Century Business Herald as saying. The resources for the ministry's infrastructure investment plan are mainly from policy banks, including China Development Bank, Zhao said. "Commercial banks, which doubt the profitability of the new railway projects, have a cautious attitude," Zhao added. Early this year, the ministry announced its plans to invest 406 billion yuan in railway infrastructure projects, with most funds earmarked to high-speed railway construction. About 122 billion yuan will come from bank loans. By the end of June, the ministry had accomplished more than one-third of its investment plan.
Bombardier to share railway technology with ChineseBombardier Inc. is trying a new approach to tapping into China’s rail market – not just building trains, but selling the blueprints. The Montreal manufacturer struck a 10-year agreement to licence a variant of the technology for its Flexity 2 line of trams to a subsidiary of China South Locomotive & Rolling Stock Corp. Ltd., the biggest player in the railway manufacturing sector. Bombardier will supply documentation, training and other assistance in manufacturing and selling the streetcars to South China unit CSR Puzhen. The company would not disclose how it gets paid but says the partnership will help it grow strong “local roots” in key Chinese markets. This type of licensing-only agreement and other partnerships, however, raise concerns in some quarters that Bombardier is simply helping China develop its rail expertise so as to eventually become a major global rival in manufacturing trains and subway cars. “I don’t think Bombardier is going to get much of a bump on this. Bombardier will regret it in 10 years when China starts mass producing their own versions,” said Malcolm Johnston, a transit advocate based in British Columbia. Bombardier Transportation spokesman Marc Laforge said the key to these types of partnerships or joint ventures is to stay ahead of the innovation curve. “Bombardier is a leader in technology and we intend to keep it that way. There’s no way we feel insecure,” he said. Martyn Briggs, of London-based consultants Frost & Sullivan Inc., sais China – as well as India – offer huge opportunities for rail product manufacturers that take the time to establish a strong presence in markets where there is growing demand for such products as trams. “It’s certainly a big opportunity for Bombardier,” he said. Bombardier has been doing a good job of differentiating itself from rivals like Siemens with next-generation light rail vehicles that cater to the needs of rapidly growing urban centres in developing economies like China, Mr. Briggs said. Bombardier has spent years deepening its presence in China. Among higher-profile projects are joint ventures to build super-high-speed trains to the Ministry of Railways as well as deals to provide subway cars to Shanghai and other cities. “After many years of intense development of metros, Chinese cities are embracing low-floor trams to complement their urban transit systems. Bombardier is now bringing its state-of-the-art technology to this new and growing market,” Jianwei Zhang, president of Bombardier China, said in a news release. |
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