Construction of Beijing's fourth metro line will become the city's first infrastructure project to benefit from non-mainland private investment.

Hong Kong Metro Corporation (MC) has secured a partnership with Beijing authorities, to help fund the city's transport system.

Speaking on Friday, Ding Xiangyang, director of the Beijing Municipal Commission for Development and Reform, said:"This is one part of the government's efforts to alleviate the financing burden of development, and improve the quality of public facilities."

According to the agreement reached by Hong Kong MC and Beijing, the two parties are responsible for operational management and civil engineering respectively.

Speaking to China Daily, Richard Wong, general-manager of the Hong Kong MC's mainland business division, said: "We will invest about 4.6 billion yuan (US$560 million) in Line 4, which will mainly go towards the purchase of carriages, signal systems, automatic fare collection (AFC) systems, and operation and maintenance fees." Beijing will carry the financial burden of tunnel and track construction, investing about 10.7 billion yuan (US$1.3 billion). In return for their investment, Hong Kong MC will gain 30 year operational rights on the line.

Line 4 was highlighted on the International Forum on Infrastructure Marketization, for its pioneering operational style.

"This is just a beginning," said Ding, indicating that the city will further widen its financing channels to fund infrastructure projects.

Metro Lines 5, 9, 10 and the airport expressway are all being encouraged to establish franchise partnerships between the local authority and private and overseas investors.

Hong Kong MC has also invested about 6 billion yuan (US$731 million) in Shenzhen metro Line 5.

Expressways and water and energy utilities are also open to private and foreign investment, Ding said.

Qin Hong, researcher with the Ministry of Construction, said urban construction in Beijing is at its peak, partly due to work related to the Olympic Games.

"Investment in infrastructure cost the city about 500 billion yuan (US$61 billion) last year, accounting for 4.3 per cent of Beijing's gross domestic product (GDP)," Qin said.

Before 1991 the infrastructure budget represented less than 1 per cent of the city's GDP.

"Expenditure in the sector has soared in recent years," She added.

Edward Farquharson, PPP (private-public partnership) expert with British PUK, Jean-Francois Rohard with French water service giant Veolia, and representatives from Spain have all shared their experience with domestic entrepreneurs and consultancy companies.

The focus was how to establish long-lasting partnerships between the private sector and the government in urban public facility construction projects.

(China Daily May 21, 2005)