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The Guangdong Luoding Railway Corporation (GLRC) has decided to put the Luoding railway line, which runs from Luoding to Maoming, up for auction as a result of continual financial losses in recent years. Auction monies will be used to finance the construction of the Luoding-Cenxi service that will operate from Luoding in Guangdong Province to Cenxi in Guangxi Zhuang Autonomous Region.

 

According to GLRC, the new Luoding-Cenxi project would cost an estimated 1.469 billion yuan (US$184 million). However, funds for the part of the railway within Luoding City limits, which is 33 kilometers long, should be raised by the city itself. Neither the railway company nor the Luoding local government can afford it.

 

The existing Luoding railway line has been running at a deficit for many years, which is why local banks have refused to grant GLRC a new loan.

 

There are only a few railway lines running within Guangdong, including the Guangzhou-Meizhou-Shantou line, Sanshui-Maoming line and Zhanjiang-Hai’an line. The line from Luoding to Maoming, owned by Luoding Railway Corporation, began operations at the end of 1999 and was the first county-level railway line in China at the time.

 

When the line was built, it was expected to reap good economic benefits, which, it was hoped, could be used to finance the construction of the Luoding-Cenxi line. However, it was only able to raise 15 million yuan a year, at best; hardly enough to repay debts of between 700 and 800 million yuan.

 

This is the first time that a state-owned railway company has had to auction off one of its properties. Up for sale are 100 percent of all rights in the line, including managerial and administrative rights.

 

The announcement, which was made on July 14, did not specify if the auction would be open to only state-run or private bidders.

 

GLRC explained that bidders must satisfy two requirements: First, they must be able to take on all the debts of Luoding Railway; and second, they must be agree to be involved in the construction of the Luoding-Cenxi Railway, which means that the eventual buyer must have at least 1 billion yuan in available funds.

 

Approved by the National Development and Reform Commission (NDRC) last year, the Luoding-Cenxi Railway project is one of the key programs agreed to by Guangdong and Guangxi as part of Economic Cooperation in the Pan-Pearl River Delta Region. Scheduled to be operational by 2008, it will be the most convenient railway channel connecting Guangdong and Guangxi.

 

According to the project plan, the Luoding-Cenxi line will start in the east from Luoding on the Chunwan-Luoding route in Guangdong and ends in the west at Cenxi Station on the Luoyang-Zhanjiang line, which is currently under construction. It will service provinces and cities in the southwest and the northern parts of China, measuring a total service length of 75.71 kilometers.

 

(China.org.cn by Xu Lin, July 23, 2006)