Rail Ministry’s debts bring biggest freight fees rise in a decade
February 28, 2013 Category Logistics, Railway transport
The crushing debt burden of the Ministry of Railways (MOR) has compelled Beijing to impose the biggest rise in rail freight tariffs in a decade. Although that may be bad news for freighters, it came as welcome news on the stock market, where the Hong Kong share price of Guangshen Railway, a freight and passenger rail company operating in Guangdong province, and of Daqin Railway, a coal rail operator; and shares in China Railway Tielong Container Logistics, a rail container operator, all rose on the news. The rate rise will increase Daqin’s revenue by about CNY1.6 billion this year, the Shanghai-listed firm announced. Its turnover was CNY43.5 billion in 2011. The Railways Ministry and the National Development and Reform Commission (NDRC) raised the rail freight tariff by 13%, the largest increase since 2003. Macquarie Analyst He Saiyi said the Railways Ministry’s debt burden was rising and its gearing ratio was beyond control, requiring it to generate more income. “The fact that they raised the tariffs higher than expected shows how desperate they are for cash,” she said. As of September 30 last year, the Railways Ministry’s debt was CNY2.6 trillion and its gearing ratio stood at 61.8%. Freight charges accounted for 50% to 70% of the Ministry’s revenue, and last year it collected CNY320 billion in freight revenues, only slightly above its repayment of principal and interest of CNY300 billion. He Saiyi said freight rates would continue to increase in the next few years. Last year’s 9.5% jump was already high, Bocom International Analyst Geoffrey Cheng said. In 2011, coal accounted for 64.2% of the country’s rail freight, the South China Morning Post reports.
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