Toll Royal Railways Yet to Spend Pledged Funds

Toll Royal Railways, the company holding the 30-year concession to operate Cambodia’s rail network, has so far only spent a tiny fraction of the millions of dollars of investment it promised upon winning the deal, documents of the firm’s expenditure show.

The operation of the railway net­­­work is dependent on the re­habilitation of the French-built tracks and many damaged bridg­es, work that is not Toll Royal’s re­sponsibility and which has suffered significant delays.

But only a small amount of the pledged investment—meant to go to new trains and track construction—has come to fruition. According to a Toll Royal financial statement, a large part of its expenditure in Cambodia has been on salaries, bonuses and travel expenses for its small staff.

Toll Royal Railways, a partnership between Australian transport giant Toll Holdings Limited and local conglomerate Royal Group, agreed in 2010 with the Council for the Development of Cambo­dia that it would invest nearly $86 million in the country.

A 2007 investment proposal from Toll Holdings to the government states that the company would in­vest $65 million for the Southern Line, the stretch of track between Phnom Penh and Sihanoukville’s port. The Southern Line was officially declared open in December after a delay, with some construction work still going on and only a small number of services running.

Yet none of the pledged investment on new locomotives, carriages and construction work—which was expected to be more than $31 million in the first year of the concession—was ever spent.

The Toll Royal financial statement, which runs up to June 30, 2011, shows that up to that date, the com­pany’s losses, or the amount that had been spent, were just $3.35 million.

That included more than $2.6 mil­lion of administrative expenses, ac­cording to the statement. Those ex­penses included $1.24 million in salaries, $147,000 in bonuses and $157,000 on “traveling and accommodation,” in 2010 and 2011.

Christopher Whitefield, Toll’s media and research manager in Mel­bourne, declined to comment on how much investment the com­pany had made.

What was spent after June 2011 is not known, but Toll Royal suspended its operations—it had been running trains between Phnom Penh and Kampot—in March, due to de­lays in rehabilitation the tracks.

Paul Power, a consultant to the Ministry of Transport’s railway de­partment, said that Toll Royal had made less than $1 million of capital investment, and was yet to purchase new trains.

“The amount of investment has not been significant,” he said. “They’ve probably lost $7 or $8 mil­lion on operating.”

But he said the delays in getting the tracks rehabilitated meant that Toll Royal had reason to delay its in­­vestment. Both the Southern Line and the Northern Line, which is far from completion and in need of extra funding, were sup­posed to be finished in 2011.

“It’s a difficult situation for Toll Royal Railways to be in because they can’t make any money be­cause the track’s not finished,” he said.

“It’s very difficult to say if that [the lack of investment] is fair or unfair.”

Ly Borin, director of the railway department, said he did not know how much had been invested so far.

“Toll is working on its business and it’s not finished. The government hasn’t decided if it is disappointed with them or not,” he said.

(Additional reporting by Eang Mengleng)

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