Prime Minister Hun Sen on Friday said he is ending Royal Railway’s contract managing the nation’s railroad system and asked that an additional $100 million be invested in improving railroads in the country.
Mr Hun Sen’s announced his decision to terminate Royal Railway’s contract during the Government-Private Sector Forum, held Friday at Phnom Penh’s Peace Palace.
The announcement followed a request from the private sector that the government focuses on improving the country’s transportation and logistics networks.
“Today I decided to terminate the contract [of Royal Railways].
“In order to improve the railway system, the Royal Government of Cambodia has decided to terminate the contract of Royal Railway Cambodia for the management of the railway system,” he said, adding that the Ministry of Public Works and Transportation will assume control of the railroads temporarily.
He said the government must now draft a plan to transfer management of the railway system efficiently and calculate how much money Royal Railway is owed.
“We are now at a transitional period, and, during this period, we must ensure that our railway system is efficient.
“We have to make the two railway lines run efficiently. To make this happen, His Excellency Aun Pornmoniroth has to take money from the government’s reserved budget in addition to what has been allocated to the railway system.
“Our trains can’t be so slow anymore,” he stressed.
“We now have the money, so we can allocate $100 million more to the railway system. This money will be used to buy new carriages. We have to do this. We have to make our trains faster and more efficient. Right now they are too slow and inefficient.”
Mr Hun Sen said he decided to terminate the contract because Royal Railway, a subsidiary of local conglomerate Royal Group, has performed poorly over the last ten years.
Van Sou Ieng, co-chair of the working group on export processing and trade facilitation and GMAC chairman, told the premier that an inefficient transportation system was one of the biggest complaints from the private sector.
“We have made some progress when it comes to logistics but our performance is still below average, according to international logistics reports. There is a real need for more infrastructure development,” he said.
“We need to build more roads and improve ports, airports, and, particularly, the railroad network which should be the most economical mode of transport, ensuring good connectivity to global markets,” he added.
In 2009, the government signed on a 30-year concession agreement, allowing Toll Cambodia – a joint-venture between Australia-owned Toll Holding Limited and local conglomerate Royal Group – to manage the operation of the railway system in Cambodia.
In 2014, Toll Holding transferred all its shares to its local partner, making Royal Group the only shareholder. The company was re-named Royal Railway Cambodia.
Over the last decade, Mr Hun Sen has repeatedly criticised the local railway system, claiming that, despite help from the Ministry of Public Works and Transportation, Royal Railway Cambodia has done little to improve railroads.
“Some trains don’t work and there is often not enough money to fix or maintain them. The company hasn’t invested once in improving the network’s operation to avoid delays. Sometimes, it provides an irregular service,” Mr Hun Sen said Friday.
“These are the main challenges that need to be resolved to improve train transportation in the country,” he said.
He said the ministry will lay the foundation for effective management of the railway system before transferring it to a qualified company through public bidding.
Prime Minister Hun Sen also urged the private sector to use trains for the shipment of goods.
“When our train system is improved, I hope importers and exporters will support it by using it for their import and export operations.
“We need to carry out feasibility studies to build new warehouses along the railroads to store, load, and unload goods along the way,” he added.
More than $226.5 million have been spent to restore the southern line – connecting Phnom Penh and Sihanoukville – and the western line – from Phnom Penh to Poipet. About $85 million came out of the national budget while the rest was lent by the Asian Development Bank and other development partners.