Tate's Cairn Tunnel firm wanted 20pc rise in tolls

Tate's Cairn operator initially sought to charge HK$2 to HK$6 more, official says, as revised proposal for 11pc increase is attacked in Legco

PUBLISHED : Saturday, 15 December, 2012, 12:00am
UPDATED : Saturday, 15 December, 2012, 3:55am

The operator of the Tate's Cairn Tunnel initially wanted to raise its tolls by nearly 20 per cent, instead of the 11 per cent now proposed, lawmakers learned yesterday.

The government first received the tunnel company's application in March for toll increases of between HK$2 and HK$6 depending on vehicle type, Undersecretary for Transport and Housing Yau Shing-mu told a meeting of the Legislative Council's transport panel.

A lower rate of increase was proposed after a discussion between the government and the tunnel operator, he said.

The Tate's Cairn Tunnel Company is now seeking approval to charge HK$1 to HK$2 more per trip from July. The last increase was in 2010. Wong Tze-kin, the company's general manager said the rises took into account inflation over 2-1/2 years, and was reasonable.

In a paper submitted to Legco, the government says the company originally proposed to raise tolls by 19.6 per cent, with the biggest increase HK$6 for buses.

"We told them to consider whether it was really necessary to increase the toll by that rate, and to consider the impact on other public transport," Yau said.

The proposal means motorcyclists would pay HK$13, private cars and taxis HK$17, minibuses HK$23, trucks HK$28, and double-decker buses HK$34.

The tunnel was built by and franchised to the company for 30 years from 1988. Wong said the tunnel had an accumulated profit of HK$625 million, far behind the expected profit of HK$4.07 billion in the bid. He attributed the shortfall to the closure of Kai Tak airport and the widening gap between toll fees for Tate's Cairn Tunnel and those for Lion Rock Tunnel, which is operated by the government and has not adjusted its fees for 13 years.

Lawmakers said the proposed increase was unreasonable. "Long Hair" Leung Kwok-hung, of the League of Social Democrats, said the government should reclaim the tunnel.

"It doesn't make sense to let a private company run a naturally monopolising business," he said. "When the Western Harbour Tunnel operator asked for a toll increase, it said it needed it because not many drivers used the tunnel. And then when the Eastern Harbour Tunnel asked for one, it said too many people were using it."

But Frankie Yick Chi-ming, the lawmaker representing the transport sector, said the rate of return was not high, considering the company's HK$2 billion investment over 30 years. "It would be difficult to find anyone to build infrastructure for the city in the future if the rate of return is that low," he said.

An application by Kowloon Motor Bus to raise fares by 8.5 per cent was also discussed in the meeting. Lawmakers attacked the two companies for their "insatiable appetite for profits".