In an effort to upgrade the country’s dilapidated railway system, the government is offering the state-run Royal Railways of Cambodia as an economic concession that investors can bid on, an official said Wednesday.
Touch Chankosal, undersecretary of state for the Ministry of Public Works and Transport, said that the Asian Development Bank has promised a $50-million loan to restore the railway tracks between Phnom Penh and Sihanoukville as well as those between the capital and the Poipet border crossing. The ADB’s offer is contingent upon the government securing an investor by Nov 30 to manage the railway system and pay back the loan, he said.
“The railway is now very difficult and very old,” he said.
One of the goals of the railway restoration is to increase the maximum speeds at which trains can operate from the current 20 kph to 50 kph, Touch Chankosal said.
“We want a suitable railway station like other countries,” he said, adding that bidding for the concession will begin on Nov 5.
Transportation companies Toll Holdings Australia and French-owned TSO have already been approved by the Public Works Ministry to bid on the concession, Touch Chankosal said, adding that whichever company is selected will then have 30 years to pay off the ADB loan.
To pave the way for the bidding process, the government issued a sub-decree signed by Prime Minister Hun Sen on Sept 12 officially declaring that Royal Railways of Cambodia could be granted as a concession following an open public bidding process.
“The concession owner has the right to do business, maintain, repair and develop the Cambodian railways,” states the sub-decree, which was printed in the most recent Royal Gazette.
Paul Power, a transaction adviser hired by the ADB to consult on the project, said Wednesday that the company that is awarded the concession would begin operating the railway by around June 2008. The first goal, Power said, will be to fix or replace the run-down railway tracks. “The line has to be rehabilitated first, as it is in very poor shape,” he said.
Power said that in addition to renovations being made to the entire rail system, staffing for the railway would most likely be downsized.
“It will be a smaller more efficient railway,” Power said, adding that the railway will likely offer more passenger services.
Rith Moeun, marketing chief for the Royal Railways of Cambodia, said the railway currently only offers weekend passenger services between Phnom Penh and Battambang town and that the trip takes approximately 12 hours—more than twice the time needed to travel by road.
He added that he is not concerned by the possibility of staff reductions.
“It’s up to the government to decide,” Rith Moeun said.
SRP lawmaker Son Chhay said that restoration of the run-down railway system is long over-due. Son Chhay welcomed the government’s decision to use a public bidding system to select which company will manage the upgrade and operations.
“If the companies, who have a good reputation, are able to take a chance on the project, they are very welcome,” he said. “We are hoping there will be a better quality of railway system then compared to what we have now.”
