[Luxury EMU Scandal - Response or Cover-up?] A response to yesterday's editorial in the Southern Metropolis Daily, "Luxury EMU Calls for Accelerated Reform" by Zheng Yuquan.
Media reports have revealed that the procurement prices of EMU components by the Ministry of Railways are far above market retail prices, often several times, even up to ten times higher. Yesterday's editorial pointed out that companies benefiting from the high-speed rail boom, apart from those under the Ministry of Railways and relevant state-owned enterprises, are mostly private enterprises with ties to former officials of the Ministry. Therefore, despite having procurement systems and bidding policies in place for EMUs and their components, the highly closed and monopolized nature of these processes has allowed substantial premiums to flow into the hands of this interest group. The editorial calls for making this interest group transparent and cutting ties between it and high-speed rail projects.
In a situation where high-speed rail construction funds are extremely tight, and many projects are on hold or delayed, the Ministry of Railways still makes such extravagant purchases of EMU components, which is hard to understand. It is well known that the high costs of high-speed rail construction, EMUs, and their component procurement have led to high ticket prices, resulting in very low occupancy rates for most periods outside of Golden Week. The expensive business class and first-class seats have almost become "special seats" for railway employees who travel for free. This, in turn, affects the capital recovery of high-speed rail and EMUs, forcing the Ministry of Railways to indefinitely extend its debt repayment cycle. In the end, either the government will bear the cost, or the state-owned commercial banks lending to the Ministry of Railways will suffer bad debt losses. Ultimately, the extravagance of the Ministry of Railways is shouldered by the common people, causing much resentment.
It is common knowledge that bulk purchase prices are lower than retail prices. If the Ministry of Railways, as the purchasing party, indeed requested changes in design and installation services from suppliers, leading to a slight increase in procurement prices, that would be normal. However, an increase of several times or even up to ten times cannot deny the presence of some underlying issues.
I believe that the Ministry of Railways should provide necessary explanations or clarifications regarding this exorbitant procurement. As mentioned earlier, if the Ministry claims that the increased procurement price is due to special requirements such as design changes, then it should disclose the technical specifications of these "special requirements," the cost structure of the components, and the bidding process of the involved components, etc.
The media has clearly exposed the outrageous procurement practices of EMU components by the Ministry of Railways, effectively serving as a whistleblower letter. The national audit, supervision departments, and the Supreme People's Procuratorate should immediately intervene in the investigation. Not only should they regularly publish updates on the investigation, but they should also thoroughly examine the existing procurement system and bidding policies to identify why they failed to prevent the exorbitant procurement.
Acknowledging problems and admitting mistakes is the only feasible way to repair credibility. As stated in the Southern Metropolis Daily editorial, the railway department has been trying to make the public believe that high-speed rail and EMUs are high-tech, high-cost products, and their high ticket prices are justified by their quality. However, this argument has now been proven false by the luxurious procurement practices. To salvage its image, the Ministry of Railways must tell the truth, strive to recover losses, and sincerely correct its mistakes. Many government departments, when faced with social doubts, often attempt to "deny outright, then try to minimize the scope of the problem, and if all else fails, blame 'temporary workers' or fallen officials." I am concerned that this time, the railway department and other relevant regulatory agencies may still resort to this logic, making the resolution of the issue seem distant.
This article was published in the February 22nd AA02 edition of the Southern Metropolis Daily's editorial section. The link is: http://gcontent.oeeee.com/8/1b/81b3833e2504647f/Blog/78d/5d2e47.html