26b yuan set aside for road debts and jobs for laid-off toll workers

PUBLISHED : Tuesday, 13 January, 2009, 12:00am
UPDATED : Tuesday, 13 January, 2009, 12:00am

Beijing will give 26 billion yuan (HK$29.5 billion) a year to provincial governments to help them pay off unpaid highway construction debts and find jobs for toll gate workers who will be made redundant by national fuel-tax reforms.

The policies will be rolled out first in about 10 provinces in eastern and central areas but the aim is to eventually dismantle all toll gates on two-lane highways across the country, according to the Economic Observer based in Beijing.

Early media reports said about 300,000 workers would be laid off from highway toll gates.

Beijing announced a new fuel-tax mechanism at the end of last year, and one of its key elements was that all toll gates along level-2 National Highways, which usually refer to roads with dual carriageways, would be phased out.

The income each provincial government earned from the tolls, which is a major source of cash for loan repayments on the highway construction bill, will be partially offset by income from the fuel tax.

The timeframe for clearing up the toll gates would vary in different provinces depending on their economic level, the newspaper said. The rich coastal provinces were expected to eliminate them within three to five years, while central provinces should do so within five to 10 years.

As for the poorest western provinces, they could continue to operate the gates for an unspecified period because road construction financed by bank loans was still their main way to upgrade infrastructure.

A highways analyst for Guoxin Securities said: 'The policy design looks reasonable, but before granting money to provincial governments, Beijing has to figure for sure the size of the debts incurred by local governments in highway construction.'

In 2007 Beijing estimated that the total outstanding debts incurred by all provincial governments for their construction of level-2 National Highways was around 200 billion yuan.

But the figure was quickly ratcheted up to 500 billion yuan one year later, when provincial governments learned that the central government would roll out a new fuel tax scheme and partially subsidise their debts.

The central government planned to cover 40 per cent, 50 per cent and 60 per cent of the highway debts on governments of coastal, central and western provinces, respectively, according to an initial plan, the Economic Observer said.

The number of retrenched tollgate workers also differs sharply based on data used by different departments.

Highway analysts have put the number at 600,000, but the People's Daily, the government mouthpiece, maintains the figure is less than 250,000.

Hit the road

The People's Daily says fewer than 250,000 toll gate operators will lose their jobs

But analysts put the figure at: 600,000