Simply too expensive!

A lot of people, especially those associated with BN, are unhappy about scrapping of the HSR project.

Thank about this:

Even if we can afford the HSR, how about the maintenance n operating costs?how about the affordability of the tickets?

Not all China’s HSR routes are making money. My recent trip to China the airfare from Shanghai to tunxi ( huangshan) is cheaper than my HSR tickets from huangshan to Hangzhou ( first class tickets).

If the cost is 110 billions, and assuming 100% financing , interest alone will be 3 -4 billions a year. How pricey will be the tickets?
Let’s assume the interest to be 3.65 billions for ease of calculation. Interest alone will be 10 millions a day. Add the operating costs. The tickets will be quite pricey. If you want to factor in the principal amount of 110 billions, the tickets will be so pricey that people may not be able to afford.

Assuming each trip can take 500 people. And assuming that there will be 20 trips a day. There will be 10000 tickets for sale. Again for the ease of calculation ( all tickets same price), each ticket needs 1000 Ringgits to just cover the interest payment.

If you price the ticket price lower,then the country will hv to subsidize the tickets. When we already have so high debts, can we afford to subsidize?

The actual ticket cost will be much more complicated n I reiterate that this calculation is simplified to show how expensive it will be to operate. Even if we increase passenger load to 50000 a day, it will still be expensive.

Note that the above calculation does not factor in the principal payment of 110 billions.
If we want to recover this cost over 20 years, we have to add 5.5 billions to the 3.65 billions interest above. That will be 9.15 billions a year. Add onto that the operating and maintenance cost.

You all can continue the simplified calculation to show how much we need to price the tickets.

For the moment, the priority is to reduce the debt level to a lower level.

Just like in a household. When your borrowings are so much that most of your pay go to pay for the interest of the borrowings, you should just try to pay as much as you can to reduce the principal borrowings.

So you have to cancel the luxury car your wife ordered , even if you have to let them forfeit the down payment.

That’s is called financial prudence.

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2 Comments (+add yours?)

  1. soobb
    Jun 29, 2018 @ 11:52:43

    110 billion ringgit cost is too exaggerated? 60 billion was the estimate

    Like

  2. soobb
    Jun 29, 2018 @ 11:55:07

    ,No money, so no build

    Like

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