The four-decade-long government controlled Beijing metro system will first pass administration rights to non-governmental investors, with Hong Kong railway operator MTR Corp. winning 30-year operation of a new Beijing metro line.
Hong Kong MTR Corp signed an agreement this week in Beijing to build and operate a new Beijing rail line, Beijing Metro Line 4, for an investment of 735 million yuan (91.8 million U.S. dollars), China Securities Journal reported on Friday.
According to the agreement, Hong Kong MTR Corp will undertake construction of major equipment for the Beijing Metro Line 4, including the trains, signals, and telecommunication service, and will operate the line in next 30 years.
The total investment in the project will be about 15.3 billion yuan (1.9 billion dollars), and the Beijing municipal government will provide 70 percent of the total investment, with the rest invested by non-governmental sectors.
According to the agreement, the project will be carried out through a joint venture, Beijing MTR Corp. Ltd., jointly held by Hong Kong MTR Corp., Beijing Infrastructure Investment Co. and state-owned Beijing Capital Group.
MTR Corp. and Beijing Capital Group will each hold 49 percent of the project. The remaining two percent will be held by Beijing Infrastructure, the agreement said.
The 29-kilometer metro line runs across the center of Beijing, linking the city's south and north.
This is the first time for Beijing to invite an non-governmental investor to operate its monopoly metro line system. The project is also the first one in China to invite the Public-private partnerships (PPPs) model in urban transport construction.
The move is viewed as an essential step in the reform of Beijing's investment system in infrastructure construction, analyst said.
Starting in 1965 when Beijing began construction of its first metro line to today's 114-kilometer-long metro lines in service, Beijing is always suffering from capital shortage in metro construction.
Sources from Beijing municipal government said that Beijing plans to build 260 kilometers new urban track lines by the year 2015, which will need a total investment of 100 billion yuan (12.5 billion dollars).
The huge capital demand will force Beijing to further reform its investment system in metro line construction. Sources said Beijing will further open door to domestic and overseas investors for the construction of future metro lines.