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Cambodia, the next setting to a ‘Battle of the Rails’

As Australian operator Toll Royal Railways looks at a possible withdrawal from in Cambodia, a new China-backed company tries to take over and promise to rehabilitate more tracks including Phnom Penh-Saigon.

According to a report published by English-written newspaper Phnom Penh Post, a new rail company, financed from Sino-Pacific Construction Consultancy Co. from China and Hikmat Asia Sdn. Bhd. from Malaysia, is looking to take over the 30-year rail concession given to Australian Toll Royal Railway and its local partner Royal Group of Companies.

Toll Royal Railway won in 2010 a concession to operate and upgrade the Cambodian rail network. By the time, ADB and AusAID agreed to fund US$ 140m network and infrastructure upgrade, with work including the South Line (254 Km) from Phnom Penh to Sihanoukville, the North Line (388 km) from Phnom Penh to Poipet (line rehabilitation) and the Missing Link (48 km) from Poipet to Sisophon, up to Thai border. The company also renovated Phnom Penh rail station in the centre of the capital, so far the most visible work done by Toll Royal Railway.

However, difficulties accumulated along with the operation of the network and its development. Delays multiplied due to the resettling of over 1,000 households living along the rail and the heavy hand of the government to find a solution according to the Phnom Penh Post. Toll Royal Railway halted all of its train services (freight) in May along the Southern Line. Neither Toll or the Cambodian government have commented publicly on the possible take-over of services by a new operator.

The company named Rail Services (Cambodia) Ltd, presented its revival plan for what it calls “Kampuchea Rail” to government officials on August 3, Chairman and Chief Executive Daryl Dealehr said a company statement obtained by the Phnom Penh Post.

The statement highlights the company’s commitment to invest US$ 850 million into the current existing rail system to continue running the Southern Line, rehabilitating lines up to the Thai border and to construct the link to Ho Chi Minh City in Vietnam. The 280-km rail link to Saigon would be new. Although the investment is high, it offers the best potential for a good return in investment due to booming economic conditions in the South Vietnam metropolis. In return to the investment, Rail Services asks to be able to operate the rail service between Phnom Penh and Ho Chi Minh City for at least 60 years and get a 40-year concession for the Northern and Southern Lines.

In the statement of Rail Services, the Phnom Penh Post reveals the list of Toll Royal Railway failures, saying that “Toll Royal: ceased existing rail services and operations in February 2012; retrenched the majority of its workforce; has not invested in rolling stock and equipment; has not undertaken rail infrastructure improvements supplementing the existing rail network; advised the Government it was unlikely to recommence rail operations before March 2013; and demanded that the RGC forgo concession fees for years five through eight and half of year nine, amounting to a waiver of revenues estimated in excess of $9.5 million.”

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Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.

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