Toll Royal derails regional projects

Don Weinland ,Phnom Penh Post,May.01  2012

The unclear future of Cambodia’s national railway, following Toll Royal Railways’ suspension of operations on March 31, has cast doubt not only on the oft-delayed redevelopment project but also on a larger build-out expected to connect much of Asia.

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A TOLL ROYAL EMPLOYEE STOPS TRAFFIC AT A RAILWAY CROSSING IN PHNOM PENH’S TUOL KORK DISTRICT IN 2010.

Toll Royal, a joint venture by Australian logistics firm Toll Group and Cambodian conglomerate Royal Group of Companies, had halted operations after continued setbacks in the redevelopment prevented the company generating sufficient revenues, sources familiar with the matter told the Post in March.

But the stoppage also will affect the completion of the so-called Singapore-Kunming, China line, which has been under discussion for nearly 20 years and in which Cambodia is expected to be one of three key links.

“Obviously, this has implications well beyond the borders of Cambodia. It’s a major setback,” Pierre Chartier, a transportation expert at the United Nations Economic and Social Commission for Asia, said from Bangkok yesterday.

Slower progress on Cambodia’s rail lines could mean a slowdown for regional connectivity in general.

If rehabilitation and operational efforts decelerate on the Cambodian side, efforts to restore connecting tracks in Thailand and Vietnam could also lose momentum, Chartier said.

The Cambodian rail model was a unique one, not only in the region but also in the world, Chartier said.

While most governments look internally for rail operators, Toll’s concession was a bellwether for privatisation in the industry, he said.

“It was an interesting model for development. This could have created a best-practice example for other countries. The fact that [the Toll concession] is causing a lot of problems is not going to be good for the cause of privatisation.”

Domestically, delayed rail progress would mean more traffic on the roads, more pollution and more vehicle accidents, Chartier noted.

But more than six weeks after Toll Group notified Cambodian officials of its imminent suspension of rail operations in the Kingdom, neither the government nor the company has issued a statement formally announcing the freeze.

The Cambodian government has placed the burden on Toll Group to make clear its intentions and future in the Kingdom.

“I don’t think there will be an official comment from the government because Toll did not make an official comment,” Council of Ministers spokesman Ek Tha said yesterday.

“It is Toll’s responsibility to make this announcement.”

Toll Group spokesman Andrew Ethell said in Melbourne yesterday the company had yet to release an official statement on its Cambodian operations and did not offer a time frame for a potential announcement.

Rehabilitation of the railway was “well behind schedule” and did not comply with Toll’s business plans, Paul Power, a consultant at the Ministry of Public Works and Transport(MPWT) said in March.

Other inside sources had said that frequent delays in the project had frustrated Toll.

The suspension on operations, which reportedly will last a year, has perplexed the government.

Cambodia’s integral role in the Singapore-Kunming rail line made Toll’s 30-year concession a keystone for rail lines that were hoped to link all of peninsular Southeast Asia.

“I can’t understand why they would pull out. Cambodia is the centre of this rail network,” Ek Tha said.

According to a report prepared for the World Bank in July last year, the lack of rail transport could also stymie rice exports.

“Indeed, several of the leading exporters express the view that exports could stall at 250,000 tons before rail improvements and port improvements are in place two-plus years hence,” the report states.

“The sole reliance on containers will preclude reaching the 1-million-tonne export target for 2015 for both logistics and marketing considerations.”

Transporting Cambodian rice costs US$15 per 100 kilometres, three times higher than in Thailand, Sok Muniroth, an agro-business adviser at Agricultural Development International, said yesterday.

Rail development was closely linked to the competitiveness of Cambodia’s milled-rice exports, he said. “This is still a big issue in Cambodia.”

Toll Royal sent letters to officials at the MPWT and Asian Development Bank on March 16, the Post reported at the time.

The company halted operations on Cambodia’s only functional line – a stretch between Phnom Penh and Touk Meas, near Kampot – on March 31.

Half of the company’s Cambodian staff were reportedly laid off the same day, although Toll has so far been mum on the exact number of domestic workers that were let go.

Australia’s Toll Group Suspends Operations on Railway Project

Men Kimseng, VOA Khmer, march. 29 2012

In this photo taken Wednesday, Oct. 20, 2010, a service train operated by Toll Royal Cambodia passes over a river, just south of the Cambodian capital Phnom Penh. An Australian joint venture has a 30-year lease to upgrade and operate Cambodia’s railway, part of the Cambodian government’s efforts to spur the economy and link up with the other economies of the Mekong River region of Southeast Asia

Families that were displaced by a major railway project are facing uncertain futures, after an Australian company announced it was suspending operations on the multimillion-dollar project.

The Toll Group will suspend operations in April, according to media reports and the Asian Development Bank, which is funding the rehabilitation with the Australian government.

The future of project is unclear, and many families have already been moved from proposed railway improvement sites.

Across Borders, told VOA Khmer.

The group does not want Toll to withdraw from the project, he said. “We have contacted Toll many times asking them to engage in dialogues with residents to find a solution.”

Some responsibility must now fall to the Asian Development Bank to help people displaced by the project, he said. “If the burden falls only on the government, we know for sure the issue won’t be resolved, and it will ultimately fall on the affected persons.”

The ADB said in a statement it is working to ensure better living conditions for the displaced.

“We share concerns raised by NGOs about the indebtedness of some families following their move and are committed to ensuring that families who have had to move end up at least as well off, if not better off, than they were before their move,” it said.

ADB publishes new Environmental Monitoring Report, Says TSO is Failing its Workers

The Greater Mekong Subregion Rehabilitation of the Railway in Cambodia Project: Environmental Monitoring Report No.9 can now be accessed from the ADB website. According to the report, as of November 2011, the Southern Line was 51.9% complete, while the Northern Line was just 3% complete. The “missing link” between Sisophone and Poipet was 35.4% complete.

The report also notes TSO’s environmental report for November 2011 had not been submitted due termination of TSO’s QE manager. It further discusses the inadequate housing and sanitary conditions of some of the construction workers along the tracks, in particular Kampot station where the situation amounts to a “very high” health risk. TSO is also accused of not providing its staff adequate safety tools.

Toll trains said to stop March 31

Tom Brennan , Phnom Penh Post, March 20  2012

Toll Group has informed the Cambodian government that it will suspend all railway operations and lay off half of its Cambodian staff at the end of the month, according to a source familiar with the situation.

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AN EMPLOYEE OF TOLL ROYAL RIDES ON A TRAIN NEAR PHNOM PENH

RAILWAY STATION. PHOTO BY SOVAN PHILONG

120320_09The Australian logistics firm, which in partnership with Royal Group of Companies holds a 30-year lease to operate the Kingdom’s national railway, reportedly told the government of its plan last Friday, Paul Power, a consultant to the Ministry of Public Works and Transportation (MPWT), told the Post yesterday. “The major reason is the rehabilitation [of the railway] is well behind schedule. And Toll believes, rightly or wrongly, the schedule of rehabilitation doesn’t meet with their business objectives,” he said by phone, adding that discussions between Toll and the Cambodian government had been ongoing since last summer.

Power presently works as project coordinator for MPWT, upgrading the ministry’s Railway Department. The department is tasked with, among other duties, the implementation of the concession agreement between the government and Toll Royal Railway, the Toll Group-Royal Group joint venture.“Suspension of service and employees takes effect March 31,” Power said in a follow-up email yesterday. Sixty Cambodians out of a total staff of 120 will be laid off on a re-call basis, he said, “with only one expat out of four remaining as far as I know”.
Insiders have said recently that Toll Group had grown frustrated with the often-delayed rehabilitation of the Cambodian national railway, especially the southern line that connects Phnom Penh with Sihanoukville port, and planned to withdraw from the project.
Toll Group officials in Australia declined to comment on a report in the Australian press last week to that effect, but Toll officials in Cambodia said a statement on the status of the project was now being drafted for release.
Toll Group has not yet issued that statement.
When asked yesterday about its reported suspension notice to the government, Toll Group spokesman Andrew Ethell in Melbourne and Toll Royal CEO David Kerr again declined to comment.
The Post reached Touch Chankosal, the MPWT secretary of state in charge of the rail project, multiple times yesterday evening by phone, but he said he was in a meeting and declined to comment.
Two spokesmen at the Council of Ministers claimed they still had no knowledge of Toll’s announcement that it would suspend operations.
Depite Toll’s complaints, the rehabilitation process has seen “marked improvements” of late, Philip Bulmer, deputy project manager for the southern line with Nippon Koei, said.
Nippon Koei is a railway engineering firm also working on the project.
Sinopacific Construction Corp, which is registered in Vietnam but has roots in Taiwan and mainland China, has “recently mobilised significant resources” to jump-start the rebuilding, he said.
SPCC is in a joint venture with France’s TSO to restore the railway.
“Everybody’s working hard now to attain limited commercial operation by October of this year,” Bulmer said of the southern line.
The southern line was originally projected for completion in late 2010, but was later pushed back to May 2011.
Full completion is now expected in January next year, Bulmer said.
He blamed the rehabilitation delays on “contractual issues”, but declined to comment further.
If Toll Group aimed to prompt faster rehabilitation by suspending operations, the company may have made a mistake, MPWT consultant Power said.
Toll is presently leasing its trains to TSO to carry construction material and equipment to work sites.
But with operations now coming to a halt, the rebuilding will most likely move even more slowly, Power said.
“I don’t think it’s a good strategy, but I’m not an investor,” he said of Toll’s decision. “We don’t have the trains to complete the rehab.”
Power called the status of the rail project an “uncertain situation”, saying “the government needs to measure the impact of Toll’s suspension of service and consider its options”.