After decades of disrepair and decay, a 120-km rail line from Phnom Penh to Kampot province officially began transporting freight yesterday in the first phase of a renovation project that will one day connect Cambodia with Thailand, Malaysia and Singapore.
The $141 million rail project is expected to reach Preah Sihanouk province and its port by mid-2011, and in 2012 a northern line will run through Battambang city to Poipet, completing the 652 km of newly refurbished track.
“The restoration of this railway is a contribution to support Cambodia’s economic development and strengthens links in the region and the world by increasing competition, cost effectiveness and giving convenient transportation,” said Finance Minister Keat Chhon, speaking at an inauguration ceremony yesterday at the Phnom Penh Railway Station.
The addition of a railway will provide Cambodia with ways to reduce transportation costs, encourage trade, create jobs, improve traffic on roads and strengthen links between cities and rural areas, he said.
The Asian Development Bank provided an $84 million loan toward the project, while the Australian government provided $21.5 million in grants. Cambodia provided more than $20 million, with additional financial support coming from Malaysia and the OPEC Fund for International Development.
The southern line first began service in the 1930s and the northern line in the 1960s. However, the onset of civil war in 1970 began a sustained period of disrepair while warfare seriously damaged large portions of the track.
In recent years derailments on the two lines have been a frequent occurrence with trains running infrequently and at snails pace.
Last year Toll Royal Railway, a joint venture between the Australian firm Toll Group and the Cambodia conglomerate Royal Group, signed a 30-year agreement to operate the railway, which is being rebuilt by the French firm TSO.
The railway has been transporting cement from Touk Meas district in Kampot province under test conditions since October 1.
Wayne Hunt, CEO and President of Toll’s global logistics division, said Thursday that it will take two to three years for the railway to break even financially and even more time before it turns a profit. Many potential freight customers will not see rails as an alternative to roads at first, he said.
“Our history in other areas has been that you really do need to get the railway up and running and show people that you actually have consistent services for a while,” he said at a new conference in Phnom Penh.
He added that Toll and the government have already discussed the topic of opening up the railway to passengers, but profitability will come first.
“It will be a few years yet, but obviously the high tourist influx into Cambodia is something that we are aware of,” he said. There is a “spirit of agreement between both parties to continue to reassess the options and commercial viability of a passenger rail.”
Kunio Senga, director general of the Southeast Asia department of the Asian Development Bank, said the railway will create a link that runs all the way to Singapore.
“Within the next 2 years, we expect that Cambodia’s railway will be fully reinstated and reconnected with Thailand. At the same time, Cambodia again will have an effective national railway for the benefit of the country and its neighbors,” he said during yesterday’s inauguration.
Completion of the project will also bring the Greater Mekong Subregion closer to a rail line between China’s Kunming City and Singapore. However, financing still has to be confirmed for construction on the 258 kilometers of rail from Cambodia to Vietnam.
China is conducting a study on the project, which is expected to cost about $600 million.
(Additional reporting by Kuch Naren)