Logo of Phnom Penh Post newspaper Phnom Penh Post - Toll bails on rail, citing revenue

Toll bails on rail, citing revenue

Pictured is a section of railroad near Samrong Estat
Pictured is a section of railroad near Samrong Estate on the outskirts of Phnom Penh earlier this year where a Toll freight terminal was supposed to be constructed. Hong Menea

Toll bails on rail, citing revenue

Publicly listed Australian logistics firm Toll Group has sold its stake in the Kingdom’s national railway, a project plagued with botched community resettlement attempts and development setbacks.

A Toll Group draft media statement, dated today, says Toll Group on Friday offloaded its 55-per-cent stake in the Toll Royal Railway concession to its joint venture partner, Royal Group.

“The decision to divest our interest in the concession was not taken lightly, but it was decided after generating lower-than-expected returns over a period of time,” Toll group managing director, Brian Kruger, is quoted saying in the statement.

“In addition, setbacks and delays in track rehabilitation works by external contractors over the past two years has in our view also impeded the efficient operation, and hence economic viability of the railway.”

Toll will continue to provide external logistics support to Royal Group, today’s media statement says.

“Toll Royal Railway has prided itself on the professional approach it has taken to training staff, safety management, community education and operational excellence, and Toll recognizes the importance of the improvement of logistics services to support the growth and prosperity of Cambodia,” Kruger said in the statement.

In 2009, the Cambodian government awarded Toll Royal Railway a 30-year concession to operate the Cambodian Railway Network and also the rights to Samrong Estate on the outskirts of Phnom Penh to build a new freight terminal.

Toll Royal Railway’s contract was part of the Asian Development Bank (ADB) and the Australian government’s $143 million rail rehabilitation project, which included repairing the 254-kilometre line from Phnom Penh to Sihanoukville and the 388-kilometre line from Phnom Penh to Poipet.

The ADB project, however, came under scrutiny this year when an internal audit revealed the bank failed to ensure just resettlement and compensation for more than 4,000 families impacted by the works.

The report also highlighted the in-limbo status of Samrong Estate, where Toll Royal had planned to build the new freight facility.

Today, the southern railway line has been completed while the northern line remains unfinished due to a lack of funding, according to the ADB.

Ly Borin, chief of the Ministry of Transportation’s railway department, declined to comment on whether Samrong Estate remains green lit for the new freight terminal.

Toll did not detail how much the company had lost during its five-year concession, how much the company sold its 55 per cent stake in the joint venture for, or whether the sale had even been approved yet by Cambodian authorities.

But, Toll exiting the Royal Group joint venture and the embattled Cambodian railway project could be part of a much wider effort to consolidate under-performing investments.

Off the back of a mere 1.1 per cent increase in revenues across the entire Toll Group for the 2014 financial year, the company on November 24 announced it is selling off its Toll Marine Logistics Northern Australian marine freight business, Toll Marine Logistics Asia business, Toll Global Express Asia and its interests in India.

“While the final timing of the various transactions . . . will vary between the first half and second half of this financial year, we expect that they will all complete during this financial year, resulting in an overall positive contribution to reported earnings,” the company said in the November 24 filing to the Australian Stock Exchange.

“The cash proceeds from these transactions, excluding the sale of TOPS property assets, are expected to be in excess of AUS$100 million.”

Representatives from both Toll Group and Royal Group declined to comment.

MOST VIEWED

  • Joy as Koh Ker Temple registered by UNESCO

    Cambodia's Koh Ker Temple archaeological site has been officially added to UNESCO’s World Heritage List, during the 45th session of the World Heritage Committee held in Riyadh, Saudi Arabia, on September 17. The ancient temple, also known as Lingapura or Chok Gargyar, is located in

  • Famed US collector family return artefacts to Cambodia

    In the latest repatriation of ancient artefacts from the US, a total of 33 pieces of Khmer cultural heritage will soon return home, according to the Ministry of Culture and Fine Arts. In a September 12 press statement, it said the US Attorney’s Office for the

  • Cambodia set to celebrate Koh Ker UNESCO listing

    To celebrate the inscription of the Koh Ker archaeological site on UNESCO’s World Heritage List, the Ministry of Cults and Religion has appealed to pagodas and places of worship to celebrate the achievement by ringing bells, shaking rattles and banging gongs on September 20. Venerable

  • Kampot curfew imposed to curb ‘gang’ violence

    Kampot provincial police have announced measures to contain a recent spike in antisocial behaviour by “unruly’ youth. Officials say the province has been plagued by recent violence among so-called “gang members”, who often fight with weapons such as knives and machetes. Several social observers have

  • PM outlines plans to discuss trade, policy during US visit

    Prime Minister Hun Manet is set to meet with senior US officials and business leaders during his upcoming visit to the US for the UN General Assembly (UNGA), scheduled for September 20. While addressing nearly 20,000 workers in Kampong Speu province, Manet said he aims to affirm

  • Manet touches down in Beijing for high-level meetings

    Prime Minister Hun Manet arrived in Beijing on September 14 for his first official visit to China, where he is slated to attend the 20th China-ASEAN Expo and meet other leaders including Chinese President Xi Jinping. Upon his arrival, Manet laid a wreath at the Monument