Business     

Rail project still owing money, says audit office

Shanghai Daily, March 20, 2012

• The Beijing-Shanghai High-speed Railway project was 8.2 billion yuan (US$1.3 billion) in arrears last May and some of the money is still outstanding, China's audit administration said in a report issued yesterday.

  The National Audit Office didn't specify how much was still owed to suppliers and workers but urged the Beijing-Shanghai High-speed Railway Corp, the company set up to handle the project, to find ways to raise capital and pay off the debts.

  The report also disclosed that 491 million yuan used for property demolition had been embezzled by local governments along the line. Other problems identified involved bidding procedures and management.

  The audit office, which had followed the progress of the 217.6 billion yuan project since it went into operation last June until last September, said there had been improvements in safety and quality controls as well as capital management but said that in some areas, such as purchasing and bidding, regulations were flouted.

  During their investigation, officials found that by May last year 5.87 billion yuan was owed to 656 material providers while another 2.37 billion yuan due to construction workers had not been paid.

  Higher price

  The report also said that the bidding process had not been followed in purchasing materials worth a total of 849 million yuan.

  For example, the company bought parts to be used on the track for more than 28.33 million yuan without any bids being sought.

  In another case, the company bought materials that had not won the bidding process and were at a higher price.

  The report also identified waste during construction. Last March, the company cancelled the installation of windproof screens that were to stretch along a section more than 177 kilometers long. The abandoned equipment was valued at 413 million yuan. Some of the screens were subsequently used on other lines.

  China's high-speed railway network expansion is slowing, mainly due to financing difficulties. Banks are reluctant to continue lending money, fearing it will not be paid back.

  China plans to further cut spending on railway construction this year amid concerns about the sector's debt and safety issues. The railway ministry has earmarked 400 billion yuan for railway infrastructure construction this year. That compares with the 700 billion yuan spent in 2010.

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