Questions concerning the amount of funding necessary to build California’s high speed rail system could open the way for investment from Chinese firms including the Export-Import Bank of China.
Private American companies are beginning to question whether there will be enough funding to build the high speed rail system. As a result, the California High Speed Rail Authority has asked for suggestions from the private investment sector.
They received 36 submissions from major construction and engineering firms complaining about the excessively large amount of money necessary to build the infrastructure project.
William Grindley, a retired international business consultant, told Yahoo News the $68 billion needed to build the rail system is too expensive to be funded by one entity.
“No private investor will hand over the billions they are asking for and then allow the state to own and govern the use of that investment.”
The team of Chinese firms, led by China Railway International, told the rail authority they could provide design experience and construction, as well as financing.
“To the Chinese team, a relatively large-scale contract is proper and reasonable.”
The team of Chinese companies interested in investing in the California rail system is the most profitable train builder in the world. Recently, they agreed to help build a high speed rail system between Las Vegas and Los Angeles and they also took the lead in a rail system construction project in Russia. They also applied to build other rail systems in Mexico and Indonesia, but were denied.
Meanwhile, in its submission to the California rail authority the construction and engineering company Parsons complained about the lack of investment from private financiers and suggested the government break up the proposed rail plan into smaller more easily financeable pieces, according to Yahoo News.
“The total funding identified is still insufficient. This shortfall, as well as the uncertainty around these sources, must be addressed.”
Some $13.2 billion of the needed $68 billion has already been raised by state and local funds. Voters approved $10 billion in construction bonds in 2008 and the federal government committed $3.5 billion in matching funds while $750 million was funded by offsets from carbon emissions.
The budget shortfall is adding to the controversy surrounding the rail project. Passenger tickets aren’t expected to cover the cost of railway construction.
The proposed high speed rail system is planned to run from San Francisco to Los Angeles and operate at speeds of up to 220 miles per hour making the trip in 2 hours 40 minutes. An expansion to San Diego in the south and Sacramento in the north will be added later.
The first part of the high speed rail is a route between Merced and Burbank slated to open in 2022 with a route connecting San Francisco and Los Angeles slated for completion in 2029.
Construction on the Palo Alto segment of the high speed rail project is planned to commence sooner than expected, which is raising some concerns among city council members. They’re asking for a grade separation at major intersections to improve safety.
Meanwhile, construction in Kern County has been postponed after the deadline for submitting bids was extended an additional month. The new deadline for a construction proposal of the 22 mile segment from Tulare to Shafter is now Nov. 13.
The high speed rail project has been controversial from its inception with critics questioning everything from funding sources and ridership estimates to ticket prices and proposed route plans.
Whether the high speed rail system will eventually be built still remains to be seen.
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