In China Securities Journal Wei Qiang, vice-director of UBS Securities, is reported as saying the railway sector will see an annual investment gap of RMB200 billion ($28.60 billion) in three years.

He said the railways need RMB1.25 trillion in capital over the five years between 2006 and 2010.

Capital expenditures will exceed RMB300 billion annually over the next three years, resulting in an investment gap of RMB200 billion for the period.

UBS’s research report says that compared with other industries including power, telecommunications and banks, the railway sector is still in its initial phase with more reconstruction pressure.

Wei Qiang said the Ministry of Railways will inject more capital in three listed companies — Daqin Railways, Guangshen Railways and Tielong Container Logistics —  and attract more commercial capital, including private capital.

He said, ‘It is impossible to issue bonds or loans to fill the gap. He explained that in 2006, the Ministry of Railways’ capital and interest repayments totaled RMB56 billion, far higher than the profit of RMB3.2 billion.
Source: China Daily