Ministry to take 35% stake in rail group
Posted on Oct-31-2007· by china investor
BEIJING, Oct. 31 — The Ministry of Railways is expected to take a stake of around 35 percent in a new investment group to finance the Beijing-Shanghai high-speed railway, sources said.
The ministry will invest 40 billion yuan in the firm, which is expected to be established before the end of the year, the sources said.
Five institutional investors – Bank of China, the Industrial and Commercial Bank of China, China Construction Bank, the National Council for Social Security Fund and a foreign private equity fund -will invest 10 billion yuan each for a total stake of about 45 percent in the new firm, the Beijing-Shanghai High-Speed Railway Corp.
The local governments of Beijing, Shanghai and Tianjiin municipalities and Hebei, Shandong, Anhui and Jiangsu provinces will inject 20 billion yuan in cash.
The ministry said previously the high-speed railway would cost about 130 billion yuan, but has already upgraded that figure to more than 170 billion yuan due to surging real estate prices and resettlement costs, according to media reports.
But industry observers predict the eventual cost will be higher – more than 200 billion yuan – given rising raw material and labor costs.
The Beijing-Shanghai High-Speed Railway Corp will have registered capital of 110 billion yuan.
Industry sources said the government plans to raise another 110 billion yuan through bank loans and bond issues.
The State Council last month approved a feasibility study frameBorder=0 width=604 height=28>
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