China Confides in Yantai-Dalian Railway Ferry Project

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Last updated at: (Beijing Time) Saturday, April 27, 2002

China Confides in Yantai-Dalian Railway Ferry Project

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The Yantan-Dalian railway ferry project, the first Chinese railway project to accept direct foreign investment has drawn attention from foreign investors with its golden route, excellent investment environment, and high profit return.

Chi Baozhang, general manager of the Sinorail Bohai Train Ferry Co. Ltd (SBTFC), which is also the project's sponsor on the Chinese side, said that more than 50 foreign firms and investment agencies have contacted them since the investment news was released.

According to Chi, a growing number of foreign companies are interested in negotiations, and include firms from Germany, France, Japan, and the United States with even individual investors expressing keen interest.

The total investment sought is estimated to be 3.39 billion yuan, of which approximately 2.43 billion yuan will be used for construction, said Chi, adding that the investors' profit return is predicted to be above 12 percent, so there will be no difficulty in attracting foreign investment.

Representatives from Credit Lyonnais, a company which joined the Shenyang-Qinhuangdao Railway project, were present at the project promotion meeting held jointly by the Chinese Ministry of Railways (MOR), the government of Shandong Province and the Dalian city government. Guillaume Dehan, corporate manager of the Beijing Office of Credit Lyonnais, said this project is very special as it is the first time foreign investors have been able to invest directly in a Chinese railway project. He was hoping to acquire more information from the promotion meeting in order to look at the possibility of cooperation.

In France, railway departments are financed, built and administered wholly by the government, said Dehan, adding that the Yantai-Dalian Railway project shows that China's railway infrastructure construction is becoming more open.

The Transportation and Economic Research Associates Company from the U.S. sent three senior staff to attend the meeting. Asil Gezen, president of the company said the Yantai-Dalian railway project will play a positive role in China's railway building, and will be very helpful for advancing technological cooperation and exchanges between China and other countries.

Huber Guy, a senior manager from a France and Saudi Arabia joint venture, showed intense interest in the project. He expressed great satisfaction with the investment environment, saying he believed that the two cities of Yantai and Dalian both have a very prosperous future.

Director of the Development Planning Department under the MOR, Cao Jing, said that foreign investors are entitled a share-holding of 25 percent to 49 percent in the project.

He remarked, "thorough preparations have been made for the project including prospecting, designing, feasibility studies and profit return estimates, so we have full confidence in the success of this project."

According to the MOR, the railway starts from Dalian City in the south end of the Liaodong Peninsular and terminates at Yantai City in the northern part of Shandong Peninsular, crossing the Bohai Bay with a direct distance of 79.4 nautical miles or 147 km, and will shorten the traveling distance between Northeast China and Shandong province and Northeast China and the Yangtze delta by 400 and 1000 km, respectively. The project, officially approved in 1997, has already been listed in the 10th railway Five-Year-Plan.

Sinorail Bohai Train Ferry Co. Ltd (SBTFC), the Chinese sponsor, is now seeking direct investment from overseas to set up a joint venture or a cooperation firm which will be fully responsible for the financing, construction, operation and maintenance of the project. The project will be carried out by using the BOT (build, operate and transfer) method or as a traditional joint venture.

The project is estimated to be completed in two and a half years and go into operation in 2005.

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