Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Railway Reform: Toolkit for Improving Rail Sector Performance
Case Study: China Rail
vestors. Some 19 joint-venture railways were newly formed to support trunkcorridor
development. In 2007, MOR reached agreement with international
freight and logistics companies to establish a joint venture company to develop
and operate the new regional container hubs mentioned above. On many lowdensity
lines, some separation and divestment to local management has occurred,
with an emphasis on reducing losses.
In terms of reform strategy, the National Development and Reform Commission
(NDRC) has set out policy principles to be adopted: separate government administration
from enterprise management; introduce competition where suitable;
and regulate industry more effectively. The MOR will set the timing for
these measures; for now, MOR prioritized infrastructure and service development
over basic structural change.
1.3 Purchase of Transport Services
China Rail has no policy or system of explicit payments for loss-making passenger
public service obligations. Unlike most national passenger railways, China
Rail has never built and does not operate any suburban rail networks, which in
other countries are a prime area for budgetary support. Arguably, a PSO system
may be inappropriate since Government, including MOR, explicitly views passenger
services as both social service and commercial activity, and reallocates net
revenues across RRAs to ensure financial balance in each. A PSO system isolating
and valuing the loss making elements of service may be simply unfeasible at the
scale required for China’s huge integrated passenger operation. However, the
Ministry of Finance does provide capital contributions to railway line construction
in remote regions.
1.4 Industry Regulation
The MOR is responsible for nearly all aspects of railway economic and safety
regulation, but the State Council must approve passenger fares and freight tariffs
on State railways. In practice, the NDRC administers economic and safety regulation;
it regulates and approves CR tariffs, and tariffs on new lines, and regulates
inter-Provincial joint ventures and local railways.
1.5 Ministerial Apparatus
The MOR central administrative unit, based in Beijing, is very small. In 1998,
MOR reduced its ministry staff to just over 400, down from 853. The Ministry
converted some functions into companies that operated subsequently on a feefor-service
basis, and transferred other functions, primarily transportation management
staff, to the RRAs. However, to some extent the changes were cosmetic,
because many staff continued to perform the same tasks in the same offices. The
remaining MOR staff includes nearly 100 traffic dispatchers (to conform to Article
3 of the Law). Figure 1 summarizes the Ministerial apparatus.
The World Bank Page 341