Crackdown on illegal use of highway project funds

PUBLISHED : Monday, 16 April, 2012, 12:00am
UPDATED : Monday, 16 April, 2012, 12:00am


The Ministry of Transport has begun a crackdown on misappropriation of funds meant to repay loans that were raised to build highway projects on the mainland.

'Recently the government has discovered that some local officials have illegally transferred funds which were supposed to be used by the government to repay the debt used in operating and building highways,' the ministry said on its website last week.

'Some local governments, using highway construction financing companies as a pretext, continue to illegally transfer or alter highway toll collection rights,' it added, calling for an end to such actions that it said violated the country's laws on road toll collection.

The ministry said such illegal transfers had resulted in increased highway tolls and longer toll collection periods.

'The toll charges and toll collection period must be reduced to their original levels,' it said.

Zheng Tiangxiang, a transport professor at Sun Yat-sen University in Guangzhou, said there was evidence of corruption in the management of some toll roads by local governments.

'They monopolise the toll roads and give toll collection jobs to relatives and friends and pay them high salaries,' Zheng said.

The result was that some local governments were still charging tolls on highways in their areas long after the debt on those highways had been repaid, he said.

Toll roads are also an issue in Hong Kong, where the Hong Kong Logistics Association is preparing a proposal to present to the incoming Chief Executive, Leung Chun-ying, for lower toll charges on cross-harbour tunnels.

Anthony Wong, a past president of the association, said the proposal would recommend that the Hong Kong government buy back the Eastern and Western Harbour tunnels from major shareholder Citic Pacific, and charge much lower tolls while extending the toll collection period from 25 to 70 years.

'This will reduce toll charges by almost two-thirds,' Wong said, adding that although the proposal enjoyed the support of many politicians, the administration of outgoing Chief Executive Donald Tsang Yam-kuen had failed to act on it.

On the mainland, the China Federation of Logistics and Purchasing has repeatedly told the central government that road tolls were too high.

The toll charged on the expressway from Beijing to Shenzhen was so high that it was uneconomical for trucks to use, Wong said. Most took long detours on older roads that did not charge tolls, making their journey twice as long.

At a Chinese People's Political Consultative Conference meeting last month, a delegate, Sun Jiye, called for tolls on expressways on the mainland to be lowered, the Global Times reported.

About 95 per cent of the mainland's expressways charge tolls, compared with 8.8 per cent in the US. China was capable of making some highways free to the public, Sun said.

One of the objectives of the central government's 12th five-year plan to 2015 is to reduce road tolls.

There have been complaints that listed mainland expressway companies are reaping excessive profits.

But Guotai Junan Securities analyst Gary Wong said profitability could not simply be gauged based on gross margins. 'Interest payments are a huge part of the cost of toll roads. It is common for toll roads to borrow 70 per cent of their construction costs,' he said.

After subtracting interest payments and expenses, net profit margins of most listed expressway firms were reasonably low, Wong said.