The Cambodian government is to hand over management of the national railway to an Australian company for upgrade and expansion
Photo by: Tracey Shelton
Cambodia's ailing railway system is set for a facelift under a plan funded by the Asian Development Bank.
MANAGEMENT of Cambodia's national railway is set to be transferred to an Australian company that is to upgrade the system and collect revenue.
The 30-year contract would go to Toll Holdings to renovate the existing system and add additional lines.
Revenues would be shared between the government and Toll Holdings after the operation becomes profitable, said Sokhom Pheakavanmony, director of Royal Railways of Cambodia, on Tuesday.
"This is part of our reforms to boost national growth," he told the Post. The government said that it expects to earn US$40 million from the deal with revenue sharing commencing 120 days after commercial service.
The first stage would involve renovating the existing system and rebuilding a missing section near Poipet. Also in the works is $500 million for a 255km link with Loc Ninh, Vietnam, which would be funded separately.
The agreement was made following a Monday meeting between the ADB and the government. A source who asked not to be named said the transfer would be complete on November 20.
"We expect the railroad to be mainly for passengers, not goods," said Sokhom Pheakavanmony.
The Railway earns about $2 million per year and transports a minuscule 350,000 tonnes of goods and 500,000 passengers.
"I am really happy with the government's decision to privatise the railways," said Sokhom Pheakavanmony.
Cambodia's 80-year-old railroad system has never been renovated, and the government plans to establish a Railway Authority to regulate and oversee the operations.
The existing railroad system has one line between Phnom Penh and Sihanoukville and another between Phnom Penh and Poipet.
Officials said that renovations would take place in 50km segments and would be complete after two or three years.
A system upgrade could see trains running at more than 50km per hour, up from 30km per hour currently. Under the new management, the government hopes to employ 1,000 workers.
So far, the Cambodian government has invested $13 million in railway renovations.
Cambodia is a missing link in the Asean rail system that hopes to see seamless travel between Singapore and Kunming, China.
Two bridges would also be built - one across the Tonle Sap river and a second across the Mekong River in Kampong Cham province.
An ADB official said a signing ceremony would be held when the ADB's Asia Pacific director arrives.
Foreign Affairs Minister Hor Namhong said that the Chinese government is also considering funding system upgrades.
"China is studying details on construction, so after the study, China will be a major player with construction," he said.
The Asean plus three group, which includes China, agreed to build railroad links with China.
"Chinese Premier Wen Jiabao had promised to study railroad construction from Phnom Penh to Loc Ninh."