Tunnel deal loophole lets firm raise tolls despite profits

The Tai Lam Tunnel is attracting more revenue from road users, but the operator has nevertheless raised tolls as income still falls below the minimum government projections, according to submissions to the Legislative Council yesterday.

The net income of the tunnel for the year ending in July rose 9 per cent to HK$460 million year on year.

The financial statement was released by the government after the tunnel's operator, Route 3 (CPS), increased tolls on August 19.

Lawmakers said the government was powerless to stop profitable tunnel operators from raising tariffs because of a loophole in its operating agreements with the companies.

Under the deals, if a tunnel operator's net revenue falls short of the minimum estimated net revenue stipulated by the government, the operator is allowed to raise the toll. The government projected that revenue from the Tai Lam Tunnel would be HK$1.24 billion this year and HK$1.49 billion for next year.

Labour sector lawmaker Lee Chuek-yan said the tunnel, which earned a net profit of HK$171 million this year, would see bigger revenue next year because of the extra toll income. However, Route 3 would still be entitled to another toll rise, he said. 'It's as if the government has signed a blank cheque, and the contract offers an automatic fare rise mechanism to the operator.'