Guangzhou Metro Group has set up a wholly-owned subsidiary to take over the operation of two intercity rail lines. This move broke the situation that all domestic passenger railways are operated by the "national railway system"; and, it is the first independent provincial operation project in China.
For a long time, the operation of all passenger railways in China has been in the charge of the subsidiaries of China National Railway Group (CNRG), and the operation right is in the hands of this entity regardless of whether the controlling shareholder of the railway is it or others. Although CNRG has mature experience in railway transportation, this mode of operation also limits the discourse power of other railway investors on railway operation, and consequently affecting their enthusiasm to participate in railway investment as well as diversified operation.
Two inter-city railway lines in Guangdong province which are scheduled to be opened this year will no longer be entrusted to CNRG, but will be independently operated by enterprises in Guangdong province. The two lines has started a dynamic acceptance process since July 16.
The trial in Guangdong marks the first inter-city railway project in China to be independently operated by the local province. This will not only bring about new reform in the domestic railway operation field, but also, through demonstration effect, accumulate experience for other railways with independent operation conditions, so as to promote the reform in the railway field.
The trial of independent operation
According to the Guangdong Provincial Railway Construction Investment Group Co., LTD. (Guangdong Railway Investment) disclosed on May 15 this year, the two railways to be tested are Guangzhou to Qingyuan intercity (Guang-Qing intercity), Xintang to Guangzhou North Station via Baicheng (Xin-Bai-Guang Intercity) T2 section. The two lines, which are 38.16 kilometers and 20.13 kilometers long respectively, are financed by the prefecture-level state-owned capital and Guangdong Railway Investment.
The independent operator is Guangdong Intercity Railway Operation Co., LTD, a wholly-owned subsidiary of Guangzhou Metro Group established in 2019 (Guangdong Intercity Railway Company).
The so-called independent operation means that all concrete operational matters such as train dispatching and command, equipment maintenance and management are taken charge of by railway investors other than China Railway Group. For example, passenger railways in Guangdong province are operated by China Railway Guangzhou Bureau Group Co., LTD. (hereinafter referred to as The Guangzhou Railway Group) or the Guangzhou-Shenzhen Railway Co., LTD., a company controlled by the Company.
Guangdong is determined to kick off the trial. According to a Guangzhou Daily report on September 7, 2019, in addition to the above two intercity railways, two more intercity rail lines will be taken over by Guangzhou Metro Group's subsidiaries and will be operated independently in the future, namely the Guangzhou East Ring Intercity (from Guangzhou north to Baiyun Airport T2) and the Guang-Zhao Intercity (from Guangzhou South to Foshan West).
Why does Guangdong have such a strong incentive to test the waters? On the one hand, due to the gradual shrinking of investment in inter-city railway by The China Railway Group, more and more railway investment in Guangdong province is undertaken by enterprises in the province. Invest in its own operations. Li Hongchang, a professor at the Beijing Institute of Comprehensive Transportation Development at Beijing Jiaotong University, said that The China Railway Group is focusing more on its investment and financing in the country's medium - and long-term railway network plan, while most intercity railways in Guangdong are not included. As a matter of fact, in addition to the joint venture construction of Dongguan-Huizhou, Guangfozhao and Suiguanshen intercity, other intercity railways planned after 2011 in Guangdong province will be funded by Guangdong Railway Investment Corporation and the relevant local government.
In addition, Professor Li said, that if the inter-city railway operation goes well, it can be combined with the comprehensive development of rail and land and other forms to drive the regional economic development. The independent operation of enterprises in Guangdong means that they have more autonomy in the release of corresponding policies.
Mr. Zuo Dajie, an associate professor in school of transportation and logistics, Southwest Jiaotong University, told that, in the previous mode of entrusting transportation, the entrusting party is always feeling lack of discourse power in aspects of entrusting price negotiation, organization of the fleet and the passenger organization. Meanwhile, to entrust the whole operation package to the “National Railway System” is not facilitating the linking and interoperability of the inter-city rail line and urban mass transit. For instance, when the early trains of metro and inter-city trains cannot be linked in a reasonable manner, it is not a satisfactory choice for the passengers who transfer between the lines of different types. “when the intercity rail lines are operated by the state-owned enterprises of provincial level, the aforesaid disadvantages could be avoided somehow.” Professor Zuo said.
Opportunities and Challenges
As early as 2019, relevant national policies began to encourage independent railway operation. The Reform Plan on the Division of Fiscal Authority and Expenditure Responsibility between the central and local governments in the field of transportation issued by the State Council also provided a basis for Guangdong's exploration. Specifically, the construction, maintenance, management, operation and other specific implementation matters of intercity railways can be implemented by local governments.
Plans for autonomous railway operations in Guangdong began before the plan was announced. Founded in 2010, Guangdong Pearl River Delta Intercity Rail Transit Co., Ltd. is controlled by Guangdong Province and indirectly held by China Railway Group. Since 2012, the company has been continuously entrusting new employees to Guangzhou Railway Group for daily management, thus objectively reserving talent resources for independent operation. In addition, the Pearl River Delta Intercity rail transit Dispatch and Command Center, which started construction in 2015 and was funded by Several state-owned enterprises in Guangdong province, including Guangdong Railway Investment Co., LTD, passed static acceptance on July 1 this year.
In addition to the above preliminary preparations, Guangdong province has chosen Guangzhou Metro Group as the executive party for independent operation, which is also regarded as a wise move by industry insiders. Professor Zuo said that both as rail transit, intercity railway and urban rail transit have many similarities, and Guangzhou metro Group's decades of operation experience has laid a foundation for the practice of independent operation.
But as the first experimenter, The independent operation of the Guangdong exploration road undoubtedly also faces challenges.
First of all, it needs to deal with the shortage of talents and technology. Although Guangzhou Metro group has a lot of experience running subways, they run faster than intercity lines. The fastest designed line in Guangzhou is Line 3, with a top speed of 120 kilometers per hour, while the soon-to-be-opened Guangqing and Xinbaiguang intercity lines will have a top speed of 200 kilometers and 160 kilometers respectively.
According to Professor Zuo, metro and intercity railway use different train control systems. Although the basic principle is similar, the implementation will be different at the dispatching and operation level. Starting from November 2019, Guangzhou Metro Group has issued a number of recruitment notices to recruit personnel in areas such as line maintenance and traffic safety.
Another challenge is volume of transporting. "Only when the volume reaches a certain level can it be economically viable in terms of cost. Otherwise, independent operation is costly." Li Hongchang said. According to a rating report published by Guangdong Railway Investment Corporation in June 2019, the intercity rail lines it controls are in the cultivation period and have not formed network effect, and the railway passenger transport business is still in the deficit. From 2016 to 2019, Guangdong Railway Investment Group reported net losses of 3.591 billion yuan, 2.34 billion yuan, 4.294 billion yuan and 3.05 billion yuan, respectively.
In addition, Li Hongchang believes that the management system, different modes of transport connectivity and other issues need to be paid attention to.
The Opinions of the CPC Central Committee and the State Council on Accelerating the Improvement of the Socialist Market Economy in the New Era, released on May 28, called for deepening the reform of the railway industry and promoting diversification and moderate competition in the railway transport business market. And the practice of Guangdong even in the province appeared in addition to the "national railway system" other railway transport business new subject, objectively formed a competitive situation, promote each other to optimize the quality of service.
And national ministry also has the intension to promote railway independent operation mode. In May this year, the Ministry of Transport issued to Shandong Province "Opinions on The Construction of High-speed Railway Management Mode and other Pilot Projects to build a powerful transportation country", which clearly put forward: "To promote the realization of self-management and self-management of railway owned by the provincial party".
In the eyes of the insiders, the independent operation mode of the province is suitable for the railway with network effect formed with surrounding railways. After Guangdong has gained some experience, its independent operation mode may be of reference significance to intercity railway of other provinces.
But the difference of operation mode is not the most important factor affecting railway operation. Li Hongchang believes that under the normal market order, if the trading environment is fair and market competition is introduced, it is not important what business model is adopted, what counts more is how to improve efficiency and reduce costs, how to supervise the performance of entrusted operation, how to establish dispute settlement mechanism, how to achieve the integration of railway and city and other important goals.
Article source:caixin.com
