Royal Railways of Cambodia blames weak construction sector, line upgrades and Thai border dispute for decreased volume

ROYAL Railways of Cambodia said Monday that freight volumes were down 15 percent in the first six months of 2009 over the same period last year.

It blamed the fall on the global economic crisis that has damaged the construction industry, as well as delays caused by upgrades to the rail network.

"Transport volumes have dropped to about 99,000 tonnes in the first half of this year from 116,500 in the same period last year," RRC Director General Sokhom Pheakavanmony said.

He said revenues for the six month period have not yet been calculated.

Sokhom Pheakavanmony said the Kingdom has two railroad lines. One runs from Phnom Penh to Sihanoukville in the south. The other goes from Phnom Penh west to Battambang, and from there to Sisophon on the Thai border.

He said the bulk of freight is comprised of cement, other construction materials and petroleum.

"We have seen a remarkable decline in the transportation of construction materials due to the downturn in that sector," he said. "Upgrading the railroads has disturbed train traffic, as has the border issue with Thailand, which cut the quantity of goods shipped through Poipet checkpoint."

RRC trains transported 233,000 tonnes of freight last year, generating revenues of around US$1.5 million.

Upgrading the railroads has disturbed train traffic, as has the border issue.

Cambodia's rail network was built in 1929 and was last upgraded in the 1960s. Three decades of conflict destroyed or damaged much of the system.

Under a $73 million reconstruction plan, the Asian Development Bank has loaned part of the money to refurbish 594 kilometres of line. A further 48 kilometres of destroyed track will be replaced. The government and other international partners are also contributing funds.

The line from Phnom Penh to Sihanoukville can carry 15 tonnes of freight, but after the upgrade it will be able to take 20 tonnes of freight at an average speed of up to 50 kph. That part of the project will include building a spur to Sihanoukville port.

The Phnom Penh-to-Battambang railway will be able to take 15 tonnes after refurbishing.

Work began in March 2008 to replace railway sleepers. The project is expected to finish by early 2011.

Earlier this year the government awarded a 30-year contract to Australian firm Toll Holdings to operate the railways and rail freight. Under the deal, Toll will have a 55-percent stake in the venture. Local partner Royal Group will hold the rest.

Toll said this year that the agreement is conditional on confirmation of a $145 million investment by the international community. The money will be used to upgrade the network and construct an intermodal facility in Phnom Penh.