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introduction: the total investment in the first phase of gaoming tram is as high as 838 million yuan. if calculated based on the ticket revenue in 2020, it will take 1,523 years of continuous operation to recover the investment.

author |first financial daily lin chunting

in gaoming district, foshan city, guangdong province, the world's first commercially operated hydrogen tram demonstration line has attracted much attention. recently, this modern tram demonstration line (hereinafter referred to as "gaoming tram") announced that it would suspend operations. the official reason given by the operator, foshan gaoming modern rail transit construction investment co., ltd. (hereinafter referred to as "gaoming rail investment company"), was: "equipment and facilities are undergoing maintenance."

this project, with a total investment of more than 800 million yuan, has been in operation for several years, but due to the long-term slump in passenger flow, it has almost become an "empty cruise".

▲on the hanging display screen at the cultural center station, a notice of suspension of operations by gaoming rail investment company stands out. photo by lin chunting

some people do not believe the statement that "equipment and facilities are under maintenance" because generally speaking, rail transit maintenance work should be arranged at night or other non-operating hours to reduce interference with public travel. it is rare to directly stop the entire line for maintenance.

a person in charge of the gaoming district transportation bureau told the first financial reporter that gaoming trams are currently temporarily suspended, but there is no definite timetable for when they will resume operation. a relevant staff member of the gaoming rail investment company office further told reporters that the issue of resuming tram operations still needs further evaluation and decision-making.

it is worth noting that, as the name suggests, the focus of this expensive demonstration line from the beginning was more on "demonstration" rather than "business", that is, it hopes to demonstrate the determination of the local development of rail transit manufacturing and hydrogen energy industries, and the return is expected to come from "related items" rather than the rail project itself. such ideas and practices are not unique to gaoming district.

with the gaoming tram suspended from operation, have the expectations that this hugely expensive demonstration project carried been realized?

suspended operations in less than 5 years

at noon on august 27, the sun was scorching and vehicles were coming and going on hefu avenue in gaoming district, but the railway tracks that broke through the ground in the middle of the avenue were unusually deserted, and no hydrogen-powered trams could be seen shuttling on them.

at the cultural center station along the track, a notice from gaoming rail investment company was displayed on a striking display screen: "starting from august 6, 2024, the gaoming modern tram demonstration line will arrange for equipment and facilities to be overhauled, and the demonstration line will be suspended during the overhaul period."

however, this change has had little impact on the daily commuting of local residents. "no one usually rides this tram," said ms. chen, a native of gaoming. she said she had only ridden it once, and that was to take her children to experience the novelty. as a waitress at a shopping mall directly opposite the cultural center station, ms. chen's first choice for daily commuting is to take the bus or electric car, rather than the nearby tram.

the planned route of gaoming tram demonstration line starts from the district passenger transport station in the south and ends at guangdong vocational and technical college in the north, with a total length of 17.4 kilometers. among them, the first phase of the project starts from cangjiang road in the central urban area in the south and ends at zhihu in xijiang industrial new city in the north. the line is 6.5 kilometers long and has a total of 10 stations, all of which are ground lines.

▲zhihu parking lot of modern tram demonstration line in gaoming district photo by lin chunting

in the interview, the word "inconvenient" frequently appeared in the citizens' comments. short routes, few trains, limited operating hours, slow speeds, and the inconvenience of passengers having to cross busy and wide roads and climb overpasses have made the tram more of a moving showpiece than a practical means of transportation in the minds of citizens.

meanwhile, the tram mainly serves the new urban area of ​​hecheng, gaoming, where local residents said the population is relatively small. reporters observed that although there are many newly built buildings on both sides of the track, there are not many residents in these new buildings. citizens interviewed said that some of the large buildings have not yet been delivered for use. these factors further affect the passenger flow of the tram.

since the official operation on december 30, 2019, the passenger flow of this line has been sluggish. according to official data, the annual operating passenger flow of gaoming tram in 2020 was 275,300, with an average daily passenger flow of 1,101; in 2021, the average daily passenger flow was 578. the national development and reform commission's expected passenger flow requirement for trams is "the initial passenger traffic intensity shall not be less than 0.1 million passengers/km·day".

although the passenger flow data of gaoming tram in 2022 and beyond has not been made public, according to the observations of interviewees such as ms. chen, the number of passengers on the tram has continued to decrease, especially since this year, when there are often only a few passengers in the car, and sometimes only a lonely old man can be seen.

the operating hours of trams have also been greatly reduced. according to official data, the reporter of china business news found that before the suspension, gaoming trams initially operated from 7:00 to 20:00 daily, but this year they have been adjusted to 6:55 to 9:00 and 16:35 to 20:30 on weekdays, and the interval between trains has been extended from the original 15 minutes to more than 30 minutes. in other words, since the beginning of this year, gaoming trams have actually operated for only 6 hours a day, 7 hours less than in the early days.

"for such a short distance, if i miss a train, i have to wait for half an hour, sometimes even an hour, and i'm late for work," ms. chen complained. in addition, her home is several kilometers away from the departure station. if she chooses to take the tram, she still needs to take a bus or electric car to get there first, which increases the complexity and uncertainty of travel.

"loss-making operation" has become a topic that citizens cannot avoid talking about. even with relatively good passenger flow in 2020, the annual ticket revenue of the tram, which costs only 2 yuan for the whole journey, is only 550,000 yuan (even less if the elderly and children do not need to buy tickets), which is far from enough to cover the operating costs. an insider from the gaoming district transportation bureau told reporters that this is the "best year for revenue" since the gaoming tram was put into operation.

the total investment in the first phase of gaoming tram is as high as 838 million yuan. if calculated based on the ticket revenue in 2020, it will take 1,523 years of continuous operation to recover the investment.

hopes of the “demonstration line”

during the interview in gaoming, local citizens generally questioned the investment and construction of trams and their actual operation results. some said: "it would be better to invest this money in buses"; others said: "it would be better to build a bridge across the xijiang river to xijiaoshan, so as to save the long detour from gaoming to foshan city."

on platforms such as the people's daily "leaders' message board", netizens have raised related questions and reflected related issues. the gaoming district transportation bureau once said in a reply on may 5, 2023: "the first phase of the gaoming tram demonstration line project is a demonstration line. its main function is to showcase the rail transportation equipment manufacturing industry and the hydrogen energy industry, and it is not a regular commuter line."

rail transit equipment manufacturing and hydrogen energy industries are considered one of the key paths for gaoming district to achieve "overtaking on curves" and promote regional transformation and upgrading. gaoming tram combines these two industries and thus becomes a "demonstration".

▲zhihu parking lot of modern tram demonstration line in gaoming district photo by lin chunting

public data shows that the gaoming tram demonstration line project was originally planned to start construction in november 2015 and was scheduled to be completed in 2017, but due to various reasons, construction did not start until 2017. an insider who participated in the discussion on the project investment and construction told the first financial reporter that this was a result of the integration of the interests of all parties, and each had its own needs. he said that for gaoming district, one of the main purposes of the investment and construction of the gaoming tram was to attract crrc qingdao sifang to settle its industry in gaoming.

as early as 2013, csr qingdao sifang co., ltd. (renamed crrc qingdao sifang co., ltd. after the merger of csr and csr in 2014, hereinafter referred to as "crrc qingdao sifang company") signed a contract with foshan railway investment group co., ltd. and gaoming gaojian company. the three parties jointly invested 500 million yuan to establish foshan csr rail vehicle co., ltd., and the company simultaneously released a plan to build the gaoming modern tram demonstration line project. in 2014, foshan crrc sifang rail vehicle co., ltd. (hereinafter referred to as "foshan crrc sifang company"), a subsidiary of crrc qingdao sifang company, was registered and established in gaoming. the gaoming tram is also one of the two major orders it won after landing in gaoming.

gaoming rail investment co., ltd. was established in 2016. its major shareholders include foshan gaoming construction investment group co., ltd., crrc qingdao sifang co., ltd. and foshan metro group co., ltd. among them, crrc qingdao sifang co., ltd. holds 20% of the shares.

on december 30, 2019, the gaoming tram was finally put into operation. local officials called it the world's first commercial hydrogen-powered tram launched in gaoming, foshan. this move will be written into the history of the development of china's hydrogen energy industry and even the world's hydrogen energy industry.

also in 2019, gaoming introduced key projects such as guangdong taiji power and songlan (comans) japanese auto parts industrial park. according to gaoming district's idea at the time, in the future, a hydrogen energy industry chain with hydrogen fuel cell trams as the core will be gradually built, covering infrastructure, fuel cell core components and powertrains, downstream equipment manufacturing and other links.

in 2019, the "foshan model research on the development of hydrogen energy and fuel cell vehicle industry" and the "foshan gaoming district hydrogen energy industry development plan" (hereinafter referred to as the "plan") were released. among them, the "plan" clearly states that by 2030, gaoming district's hydrogen energy industry will attract and cultivate 20 leading hydrogen energy and fuel cell companies, with an output value of 32 billion yuan, accounting for 35% of the total output value of emerging industries, and take "china hydrogen city" as its construction vision, striving to build it into a leading domestic and internationally influential hydrogen energy industry development demonstration zone.

however, gaoming tram encountered many challenges in its actual operation. as the line is planned as a ground line and shares the right of way with road traffic, the line design has been adjusted and shortened several times to avoid interfering with traffic in the central city, which largely accounts for the low passenger flow today.

the official website of the gaoming district government shows that the first phase of the gaoming tram demonstration line adopts the investment and financing method of "government-private partnership (ppp)". the total investment of the first phase of the project is 838 million yuan, and the project company is jointly established by the winning social capital and government investment representatives.

an official from the gaoming district transportation bureau revealed that in 2023 and 2024 alone, the gaoming district transportation bureau's fiscal budget expenditure (i.e. fiscal subsidies) for trams exceeded 36 million yuan.

however, according to the departmental budgets published by the gaoming district transportation bureau over the years, the first financial reporter found that by 2023, the fiscal budget expenditures arranged by gaoming district for the opening of gaoming tram have reached 377 million yuan. among them, the budget expenditures in 2020 were 4.5 million yuan (according to the 2021 data, it finally increased to more than 32.4 million yuan), and the budget in 2021 was 100 million yuan; in 2022, the fiscal budget expenditures for the operation of the line were also 100 million yuan; in 2023, the budget rose to 145 million yuan, mainly "according to the "foshan gaoming district modern tram demonstration line first phase project ppp concession contract" to pay funds including project feasibility gap subsidies and the costs of related work such as passenger flow verification and regular audits that party a needs to carry out according to the contract."

the reporter did not understand the relationship between the above-mentioned fiscal budget expenditures and the total investment of 838 million yuan in the first phase of the project. however, considering that the local general public budget revenue of gaoming district in 2023 is 4.49 billion yuan, and the expenditure is as high as 5.555 billion yuan, the annual fiscal expenditure for tram operations is also a considerable burden on the local finances.

how effective is it?

in the face of the operational difficulties of gaoming tram, the local government has held relevant seminars. among them, at the gaoming tram demonstration line operation development exchange seminar in march 2023, li jianmin, chief engineer of foshan urban planning and design institute, said something thought-provoking: gaoming tram "as a commercial hydrogen-powered tram, its operating costs, operating data, etc., all provide first-hand materials for this industry."

the local government hopes that this tram can serve as a model to attract talents. judging from the current results, companies in the two industrial chains of rail and hydrogen energy have indeed settled in gaoming district.

at the gaoming tram demonstration line operation and development exchange symposium in march 2023, the relevant person in charge introduced: "under the demonstration and leading role of the gaoming tram project, a number of hydrogen energy industry projects have settled in gaoming. such as the crrc sifang gaoming hydrogen fuel tram manufacturing base (that is, the production and manufacturing base of foshan crrc sifang company), guangdong taiji power (hydrogen) fuel cell membrane electrode technology development and production project, and faw jiefang southern new energy base project. "

according to li bangyong, deputy general manager of foshan crrc sifang co., ltd., the company's production base has a strong production capacity of 300 modern trams or 150 subway vehicles per year. however, there is no clear official data on how many of the 300 trams will use hydrogen energy as the power core.

"from a national perspective, very few trams use hydrogen as a power source, and the market space is extremely limited," a senior executive of a hydrogen fuel cell manufacturer in foshan told the first financial reporter. in fact, despite years of exploration of hydrogen rail transit at home and abroad, its large-scale promotion still faces many challenges, mainly in terms of application scenarios, technology, and cost.

when the reporter of china business news sorted out the work reports of the gaoming district government in recent years, he found that in the two years after the opening of the gaoming tram in 2019, gaoming district has attached increasing importance to the hydrogen energy industry year by year. in 2020, the work report of the gaoming district government clearly proposed to "accelerate the construction of the hydrogen energy industry chain, covering key links such as hydrogen energy supply, fuel cell vehicles and hydrogen-related equipment manufacturing"; in 2021, it further emphasized "cultivating and expanding the hydrogen energy industry cluster"; by 2022, the focus of work will shift to "strengthening the construction of new energy vehicle-related infrastructure, including charging and swapping, hydrogen refueling stations and electric vehicle charging piles, etc."

however, starting from 2023, the word "hydrogen" will no longer appear in the work report of gaoming district government, and the focus of work will be on the new energy vehicle industry. among them, the 2023 report pointed out that it is necessary to "promote the implementation of projects such as faw jiefang and zhongtai mould, and promote the leapfrog development of the new energy vehicle industry from auto parts to complete vehicle manufacturing"; and the 2024 report continued this idea and proposed "cultivating and expanding new energy vehicles and other new industries".

the industry has different opinions on whether hydrogen energy is a new energy source. some industry insiders told reporters that hydrogen energy is a secondary energy source, while others said that hydrogen energy is a "new energy" among new energy sources.

however, a senior executive of a hydrogen fuel cell manufacturing company in foshan told reporters that in foshan, gaoming district's hydrogen energy industry has not yet formed a scale, and nanhai district has developed better. official data show that the total investment in nanhai district's hydrogen energy industry has exceeded 60 billion yuan, and more than 150 hydrogen energy companies and institutions have gathered. at present, there is no official data showing the exact total investment in gaoming's hydrogen energy industry, but according to his observation, "the total investment in gaoming's hydrogen energy industry is only several billion yuan."

wechat editor| su xiao