ADB extending $300 mln loan for China’s railway project
Written by Meenaa on Wednesday, November 19th, 2008
ADB extending $300 mln loan for China’s railway project
2008-11-18 (Beijing Time) Xinhua English
MANILA, Nov. 18 (Xinhua) — The Asian Development Bank (ADB) said on Tuesday that it is extending a 300 million-U.S. dollar loan for a railway line that will bolster economic growth in the poor western region of China.
The 820-kilometer Lanzhou-Chongqing line will be the first raillink from the northern city of Lanzhou in Gansu province, passing through Shaanxi and Sichuan provinces, to the southern city of Chongqing, a key manufacturing hub and a major exporter to the Greater Mekong Subregion, the Manila-based bank said in a statement.
The Greater Mekong Subregion comprises Cambodia, China, Lao People’s Democratic Republic, Myanmar, Thailand and Vietnam.
Nearly 17 million people live in the project area. Women and ethnic minorities will be given hiring preference to build and operate the railway line, which is estimated to cost 8.6 billion dollars to build.
“The project is expected to stimulate the development of industrial and natural resources and tourism, generate employment, raise living standards and help reduce poverty,” said Manmohan Parkash, a transport specialist for ADB’s East Asia Department.
As the financing needs are substantial, funds are being tapped from several sources. ADB is providing a 27-year loan from its ordinary capital resources. The assistance is the largest single ADB project loan for China this year.
Two of China’s largest banks, China Construction Bank and the Industrial and Commercial Bank of China, will jointly provide 4 billion dollars in loans. The country’s Ministry of Railways (MOR)and the governments of Gansu, Sichuan and Chongqing will invest 4.3 billion dollars as equity, with MOR contributing 55 percent of the share, and the local governments providing the rest of the equity investment.
The railway track will be capable of handling double-stack containers, raising its carrying capacity over regular lines, reducing land use, and improving energy efficiency. Over 30 railway stations will be built and state-of-the art safety equipment will be installed.
To help create a “green corridor” along the rail route, ADB will, for the first time, finance environmental protection equipment worth nearly 12 million dollars. A switch in traffic from roads to the new rail link will result in significant cuts in fuel consumption and emissions of harmful carbon dioxide.
The proposed railway is part of China’s strategy to expand infrastructure and stimulate growth in underdeveloped interior regions of the country.
The Lanzhou-Chongqing railway will become an integral part of the railway network to boost connectivity and trade between China and the neighboring Greater Mekong Subregion, and Central Asia and Europe.
A joint venture company has been set up by MOR and the governments of Gansu, Sichuan and Chongqing to build, operate and manage the railway. It will outsource a wide range of services to the private sector, and seek strategic and private investors, given the high costs involved.
ADB is China’s leading development partner in the railway sector, providing over 3 billion dollars to build lines and improve safety standards, as well as helping with ongoing sector reforms. In addition, ADB is providing a technical assistance grant of 800,000 dollars to prepare the energy efficiency strategy for China’s railways and identify ways of improving the energy efficiency of the country’s entire rail network.
At present, railways in China have the highest freight transport density in the world and the second-highest passenger transport density after Japan. While the government has carried out an aggressive network expansion, capacity still lags demand, partly because of system bottlenecks and other constraints.
Under its current railway development plan through to 2020, the government has pledged to remove the constraints, roll out more lines, increase average speed and continue to give priority to areas that are undeveloped and lack transport services.
