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Rail ministry loses US$1.4b in H1
By Richard Fu |
September 3, 2012, Monday
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Print Edition
Print Edition
China's Ministry of Railways has posted a first-half net loss of 8.8 billion yuan (US$1.4 billion) as it struggles with rising operating costs and mounting debts.
The loss was revealed in its half-year report posted on Chinabond, a website for bond issuers. The ministry, which acts like a corporation in the debt market, is selling bonds to expand the rail network.
The comparative data for a year earlier were not available. The ministry lost 3.76 billion yuan in the first quarter of 2011 before ending last year with an annual profit of 31 million yuan, according to official data.
The ministry's total expenses were 421.5 billion yuan from January to June, more than half the 728.2 billion yuan for 2011. But the 310.8 billion yuan the ministry raised through bank loans and bonds in the first six months were less than half of the 967.4 billion yuan it raised in 2011. It raised 1.06 trillion yuan in 2010.
Market observers attributed this to the lingering aftermath of a fatal high-speed rail crash in July 2011 in east China and the removal of its former minister Liu Zhijun in February last year. The incidents had rattled investor confidence and limited the ministry's ability to borrow money or sell debts, forcing it to halt some projects.
Still, to the ministry's relief, the government is again speeding up approvals for rail projects and is opening up the sector to private sector investors after investment slowed sharply last year and China's economy grew at the slowest pace in the second quarter in more than three years.
In July, the ministry raised its budget for rail infrastructure construction this year to 470 billion yuan from the original 406 billion yuan.
The loss was revealed in its half-year report posted on Chinabond, a website for bond issuers. The ministry, which acts like a corporation in the debt market, is selling bonds to expand the rail network.
The comparative data for a year earlier were not available. The ministry lost 3.76 billion yuan in the first quarter of 2011 before ending last year with an annual profit of 31 million yuan, according to official data.
The ministry's total expenses were 421.5 billion yuan from January to June, more than half the 728.2 billion yuan for 2011. But the 310.8 billion yuan the ministry raised through bank loans and bonds in the first six months were less than half of the 967.4 billion yuan it raised in 2011. It raised 1.06 trillion yuan in 2010.
Market observers attributed this to the lingering aftermath of a fatal high-speed rail crash in July 2011 in east China and the removal of its former minister Liu Zhijun in February last year. The incidents had rattled investor confidence and limited the ministry's ability to borrow money or sell debts, forcing it to halt some projects.
Still, to the ministry's relief, the government is again speeding up approvals for rail projects and is opening up the sector to private sector investors after investment slowed sharply last year and China's economy grew at the slowest pace in the second quarter in more than three years.
In July, the ministry raised its budget for rail infrastructure construction this year to 470 billion yuan from the original 406 billion yuan.
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