(Ecns.cn) – As the first and only privately-owned passenger railway in China, the Luoding Railway is one of the first steps in the country's economic reform to privatize some of its state-owned enterprises. However, even with government support, the railway is still far from being put into operation.
On April 4, 2005, it was reported that the railway project between Luoding of Guangdong Province and Cenxi of Guangxi Province had received the go-ahead and would start construction in the latter half of that year, and be open by 2008. The railway was expected to become a main link between inland provinces (such as Guangxi, Yunnan, Guizhou and Sichuan) and coastal areas, including the Pearl River Delta, Hong Kong and Macao.
Of the original investment, only 0.15% came from state-owned capital; the other 99.85% of the stock was owned by the Tianjin Hongfeng Industrial Company (now known as Constant State Railway).
The first privately-owned railway
For a long time, traveling by train from Guangdong to Guangxi required a roundabout route to the south first and then back to the north. Rail traffic in China's southern regions had been lacking, which not only restricted communication between different cities, but also seriously affected local economic development.
In 1994, construction of the 62.15-kilometer railway linking Chunwan and Luoding began and was put into use at the end of 2000, which eliminated half of the previous travel time. This was the first local railway funded by governments at the county level, with a total investment of 800 million yuan ($123.7 million).
However, the railway could not solve all the problems. There was still a blank area of 75 kilometers between Luoding and Cenxi, making the 62.15-kilometer railway a broken thread.
At that time, the Luoding local government judged that the only answer was to build a new railway linking Luoding and Cenxi to make the line completely connected, thus a new plan was proposed to the central government.
On November 27, 2001, the former State Development and Planning Commission (now the National Development and Reform Commission) approved the proposal and estimated that the total investment would be 993 million yuan ($153.5 million). The Ministry of Railways listed it as a key project of the Tenth Five-year Plan.
On April 15, 2002, the Luoding and Cenxi local governments and the Ministry of Railways authorized three companies to be investors in the project, and established the Guangdong Luoding Yongsheng Assets Operation Co. Ltd, but registered capital was only 5 million yuan ($770,000). This amount of money was woefully inadequate for a railway estimated at 1 billion yuan ($154.6 million), a figure that was increased to 1.136 billion yuan ($175.6 million) when the project was officially examined and approved in March 2005.
