China - Shi-Zheng Railway Project

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB2416 Project Name China: Shi-Zheng Railway Region EAST ASIA AND PACIFIC Sector Railways (100%) Project ID P099062 Borrower(s) MINISTRY OF FINANCE Implementing Agency Ministry of Railways, Foreign Capital & Technical Import Center 10 Fuxing Road China Tel: 86-10-51841895 Fax: 86-10-51841845 Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 2, 2006 Estimated Date of Appraisal Authorization November 20, 2006 Estimated Date of Board Approval July, 2007 1. Key development issues and rationale for Bank involvement The railway sector is vital to the economic and social development of China, its international trade, its continued economic growth, and its ability to extend the benefits of development to people living in the remote regions of the country. China is a vast country where people and freight move over long distances, and most of the freight is of a bulk nature. Aside from specific inland waterway routes, railways provide the most economic means of transport for a wide range of freight and passenger markets. The Ministry of Railways (MOR) has been implementing successive reforms for some years: including separation of non-core units, accounting separation of passenger transport business, separation of branch lines, establishment of regulations to permit foreign investment, and establishment of special purpose companies to develop new projects. MOR is committed to further changes that will enable it to meet both (a) the need to access non traditional forms of finance for network development and (b) the challenge of functioning in a market economy amid growing customer expectations and competition from other modes. The Chinese rail network grew by 26 percent between 1994 and 2004, but the turnover of passenger and freight traffic grew by nearly 60 percent and 55 percent respectively. China Railway (CR) has not been able to keep up with the growth in demand for transportation and experiences the highest network utilization in the world. There is significant unmet demand in both passenger and freight sectors. It is clear that, if CR is not to be a brake on the future economic growth of China, it rapidly needs to create additional capacity. One option for highly congested corridors is to provide additional tracks along existing right-of- way. However, the alternative of a new route on a separate right-of-way in the same general corridor avoids the difficulties of land acquisition in a heavily developed and populated corridor Page 2 and allows higher standards suitable for high-speed operation. The Government has therefore approved MOR