I DO not think that criticism of the Western Harbour Crossing franchise plan should focus on how much has been pre-set as a suitable range for the investor's Internal Rate of Return (IRR). This is only a minor evil. It is only fair that the investor should be given a reasonable profit margin, and that a scheme be devised to allow it to increase the toll to cope with general market conditions.
It seems to me that a greater evil lies in setting the range and the formula in such a way that it will take an automatic course without any further public scrutiny.
If the Western Harbour Crossing is to be run by an independent party, the competition between the various harbour crossing companies will help to provide a commercial balance that will ensure that there will not be wild toll increases, otherwise people will use the other crossings which charge less.
But the consortium bidding for the new crossing includes those who already have a stake in harbour-crossing business in Hongkong.
Would this situation not give rise to at least two consequences? First, the other tunnel companies would strive to keep their tolls in pace with those of the Western Harbour Crossing, so that the latter can be justified and, more importantly, be acceptable to tunnel users.
Secondly, the automatic toll increase formula given to the Western Harbour Crossing company will become a main indicator that the other harbour crossing companies will use in pressing for future increases.
The criteria presently employed to determine whether the tolls should not be raised will be discarded.
I do not think the solution lies in forcing a change in the line-up of the present consortium. To do that is to interfere with free enterprise. I think the toll increase rules should not be set now, but should be left for consideration under public scrutiny.
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