Citic Pacific

Turmoil throws up solutions to crossings

PUBLISHED : Thursday, 23 October, 2008, 12:00am
UPDATED : Thursday, 23 October, 2008, 12:00am

Now and then it is worth repeating the cliche that a week is a long time in politics. It has been only that long since the chief executive went out of his way to dampen hopes of a quick solution to cross-harbour traffic congestion. While acknowledging public concern, Donald Tsang Yam-kuen said we should not underestimate the complexity of the problem.

A major cause of traffic congestion along our waterfronts on both sides of the harbour is that our three harbour tunnels are owned by separate entities and they charge tolls that bear no relationship to actual usage. The problem stems from a lack of co-ordination of the three tunnels, which were built at different times under different economic conditions and cost structures. While the government-owned, most conveniently located Cross Harbour Tunnel charges the lowest tolls, passage fees at the commercially operated eastern and western crossings are higher despite being less accessible.

As a result of the volatility of currency markets amid the financial meltdown, however, a solution may have become simpler. It has emerged in the last few days that Citic Pacific, controlling shareholder in the Eastern Harbour Tunnel and the second-largest in the Western Harbour Tunnel, stands to lose HK$15.5 billion because of unauthorised currency bets. News of its loss has led to calls for the government to take a fresh look at the cost of buying back one or both tunnels. This would enable it to relieve congestion by regulating tunnel traffic through charging differential tolls.

Until this week, such a solution had been seen as prohibitively costly, as Citic had no reason to give up two steady sources of revenue. In view of the company's currency loss and continuing market uncertainty, that is no longer so clear. The possibility of negotiating a deal that raises cash for Citic and is good for taxpayers should not be ruled out. Officials should try to work out a fair deal to enable Citic to cash out of its stakes in the two crossings.

By selling its stakes in the two tunnels to the government, Citic would be killing two birds with one stone - easing its own financial stress and helping to solve a chronic traffic problem that has afflicted Hong Kong for years.