Beijing thirsty for capital in its infrastructure construction

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Last updated at: (Beijing Time) Wednesday, November 26, 2003

Beijing thirsty for capital in its infrastructure construction

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The construction and management of Beijing's infrastructure is expected to open the door to overseas or domestic private-owned companies, according to the Beijing Municipal Development and Reform Commission.

For domestic and foreign investors to know more about the new policy, the commission opened a website about investment in Beijing.

The Special Permission to Beijing Municipal Infrastructure Management policy has been adopted by the municipal government.

Infrastructure includes supply of water, gas and heat, treatment of waste and public transportation for local residents.

A large sum of money will be saved for the government when the reform is implemented. The infrastructure is also expected to be upgraded, according to local officials.

But for Beijing, urban rail transit, though fast, efficient and pollution-free, would be a heavy strain on the city's limited budgets. Therefore, instead of depending on financing from local governments, the city is looking for funds from other channels.

Compared with Shanghai and Guangzhou, Beijing's subway is comparatively backward, and its ticket prices are too low to earn money. For this reason, the subway company still loses money even though the subway has been operated for more than 20 years.

Before 2008, when the city will host the Olympic Games, Beijing is expected to finish 10 subway lines. Facing huge demand for investment, local government has decided to raise money through the special construction funding.

It was announced earlier this month that Beijing will issue 2 billion yuan (US$240 million) in bonds next year to help finance its No 4 and 10 subway lines, the total cost of which is expected to hit 30.1 billion yuan (US$3.6 billion).

The construction of the two subways will start next month.

"I believe that over US$10 billion can be saved by the local government," said Ding Xiangyang, an official of Beijing Municipal Development and Reform Commission.

According to the commission, build-operate-transfer (BOT) and transfer-operate-transfer (TOT) will be adopted. It means when the contract expires, the investors must stop the operation and management of infrastructure programmes, and transfer them to the local government.

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