By Mao Lijun (China Daily)
Updated: 2008-01-08 09:40

Construction of the Beijing-Shanghai high-speed railway is on track after the government announced the contractors for the project's civil engineering work.

The country's four construction groups won the 83.7 billion yuan ($11.51 billion) worth of contracts for the railway's civil engineering work.

China Railway Construction Corp, the country's second largest construction contractor, was the biggest winner, with 33.74 billion yuan of contracts, or 40 percent of the project.

The other three bidders - China Railway Group, China Hydraulic and Hydroelectric Construction Group Corp and China Communications Construction Co - won 26 percent, 17 percent and 16 percent of the project.

The rail link between the nation's capital and Shanghai is expected to cost about 220 billion yuan.

The project will take five years to complete, according to a notice posted on the Ministry of Railways website.

The 1,318-km railway will cut travel time between the two cities from 10 to less than five hours, with a peak speed of 350 km. It will be able to carry at least 80 million passengers a year, experts said.

The project could be the most profitable railway in China, said Long Hua, an analyst with Haitong Securities.

"(But) it could be 10 years after the railway goes into commercial operation before a full return on investment is seen," Long said.

Many local companies are seeking funds for technology and equipment upgrades and capacity expansion to help them win contracts for projects like the rail link.

"The government has to consider whether contractors have the ability to carry out large projects," a Hong Kong-based analyst at BOC International Holdings Ltd said.

The ministry has urged rail operators and construction contractors to list their shares to boost capital and strengthen management.

Last November, China Railway Group launched a dual IPO in Shanghai and Hong Kong, raising more than 40 billion yuan.

China Railway Construction Corp is expected to go public in March and raise about 25 billion yuan.

China Hydraulic and Hydroelectric Construction Group Corp is also expected to list its shares within the year, while Hong Kong-listed China Communications Construction Co is expected to return to the A-share market within the year.

The government is trying to boost its operational railway lines from the current 78,000-km network to more than 90,000km by 2010 with a 1.25 trillion yuan investment, which will give railway construction firms huge opportunities to expand.