Sunday, November 11, 2007

Cambodia's run-down railroad set for private sector revamp

By Brendan Brady and Cheang Sokha

The rickety Cambodian railway is scheduled to receive desperately needed repairs.
With $73 million in loans and grants at its disposal, the government is now conducting twin bids - one for repairing and one for operating - the state-run Royal Railways of Cambodia (RCC), said Touch Chankosal, undersecretary of state for the Ministry of Public Works and Transports (MPWT).

Chankosal said the funds will mend the Phnom Penh-Sihanoukville as well as Phnom Penh-Poipet railway lines as part of the massive Trans-Asian Railway, which aims to create an integrated freight railroad network across Asia.

According to Chankosal, it will take three years to complete the repairs.

"The Cambodian railway is very dilapidated and requires fixing. On the current railway, the train drives very slowly, around 20kmh, and there are lots of problems. I think if the railway is fixed, the trains can run much faster, around 50kmh."

The loans include $42 million from Asian Development Bank(ADB); $13 million from OPEC Fund for International Development; a $2.8 million grant from Malaysia and $15.2 million from the government of Cambodia.

The government has already selected the restoration company to repair the tracks but the winner of the bid has not been identified.

Officials from MPWT and the ADB short-listed two companies, Toll Holding Australia and the French-based TSO, for the 30 year railway operating concession, said Paul Power, a consultant hired by the ADB to oversee the contract and advise the government.

The government is required under terms of the ADB loan to close a deal with an operator by November 30.

Power said Toll and TSO prequalified from a pool of about 10 bidders, based on their financial and technical capacity to run a railway. Power said that the repairs will not modernize the railway, but "the railway is simply being restored to the level it once had a while back."

Power highlighted the current condition of the Cambodian railway, noting that "the RCC has two new Chinese carriages, but it doesn't want to use them because they're afraid they'll derail and be ruined."

The ADB loan stipulated that the repair and operation of the railway must be privatized.

"If you want an efficient railway, you want a privately managed company. The concessionaire is expected [by the ADB] to bring a business focus. For example, at the moment there's no marketing department," said Power.

Commuters should be aware that the repairs are aimed at improving the flow of commercial goods. "The purpose of fixing the railways is not for transporting passengers. It's for transporting goods because the Ministry of Public Works and Transport is looking to reduce the use of roads for commercial transport, which damages the road because the overloaded trucks are so heavy. The new tracks will allow the carriages to carry more tonnage," explained Chankosal.

Power said the government wants the railway to provide passenger services, which, he added, invariably lose money.

"The government will have to weigh its social obligation with the cost of making a passenger service part of the contract with the concessionaire," Power added.

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