Tate's Cairn Tunnel wants HK$1 increase in toll for all vehicles
The Tate's Cairn Tunnel Company has applied for an increase in its tolls, the second increase in a year, after talks with the government on extending its franchise showed no progress.
The company, which raised tolls by between 13 per cent and 28 per cent last November, has applied for a flat HK$1 increase. Cars and taxis will pay HK$15, up from HK$14, motorcyclists HK$12, minibuses HK$22 and trucks HK$26 if the Executive Council approves the rise early next year.
General manager Wong Tse-kin said the rise was proposed because investors in the tunnel, including NWS Holdings, just started earning a profit last financial year with only nine years of the franchise left. 'We projected an internal rate of return of 13.02 per cent when we committed to build it in 1988, but it turned out it was less than half,' Wong said.
The tunnel, which has accumulated a profit of nearly HK$100 million so far, brought a 6 per cent internal rate of return. Wong said increasing the toll by HK$1 per vehicle would boost the rate by 0.1 per cent.
Traffic volume dropped from a daily average of 53,284 vehicles to below 50,000 after last year's toll rise. Wong expected another drop after this rise, but said the income lost should be offset by the toll increase.
Wong would not say whether the company would continue to apply for toll rises until the tunnel's return reached 13.02 per cent, but said a franchise extension would ease pressure to increase tolls.
A Transport and Housing Bureau official told lawmakers last April that it was negotiating with the tunnel's operator over an extension of the franchise in exchange for a more stable toll level.
However, the talks have yet to reach a conclusion.
The most recent toll increase went into force in November last year
When implemented, daily traffic volume dropped from 53,284 to below: 50,000