STRICT controls will be placed on the franchise operator running the planned Western Harbour Crossing to prevent excessive profits. The rate of return on the crossing will be guaranteed by a percentage formula agreed between the Government and the sole bidder. The formula will allow toll levels to be increased every few years. The franchise operator will be prevented from increasing the toll if the rate of return falls under the agreed percentage. Sources said the formula would enable the agent to prove its ability to repay debts to bankers and obtain loans. After the debts are repaid, the formula will prevent the tunnel operator from making excessive profits, sources said. If the company has a higher rate of return than permitted in the formula, it will have to pay royalties. When the tender for the tunnel closed last July, only one consortium, formed by the China International Trust and Investment Corporation, the Cross Harbour Tunnel Co and China Merchants Holdings, bid for the $7 billion project. The Government engaged in tough negotiations with the bidder to reach agreement on the terms of the franchise. The chairman of the Cross Harbour Tunnel Co., Mr Gerry Higginson, said the consortium had proposed a different toll increase mechanism to ensure a comfortable level of return. ''Any investor putting in this massive investment would look for a comfortable level of return,'' Mr Higginson said. ''But the level of comfortable return is not necessarily provided for in the present system.'' Sources said that, under the present system, franchise operators could not be certain of their fare or toll increases. It would be difficult for them to assure bankers that they could repay loans. Earlier this year, Legco members blocked the $1 toll increase for three government tunnels. The Secretary for Treasury, Mr Yeung Kai-yin, warned that the block would discourage private investment in major transport infrastructure such as the Western Harbour Crossing. The agreement between the Government and the consortium on the tunnel will soon be put to the Executive Council and to the Chinese side since the Western Harbour Crossing is one of the 10 airport core projects. Sources said if the formula was voted down by Legco, the deal with the consortium would collapse. The franchisee will construct, finance and operate the tunnel for 30 years in exchange for the right to charge tolls. After 30 years, the tunnel will become government property. The Western Harbour Crossing will comprise a dual three-lane carriageway between Sai Ying Pun and West Kowloon. When the tunnel opens in 1997, 85,000 vehicles are expected to use it. By 2010, the tunnel will be at full capacity, with 180,000 cars daily. The franchise is to be awarded in August. Mr Higginson said he was optimistic about the project although the Chinese side had not yet approved the airport projects. ''We had done our part and the ball is now in the Government's court to take the agreement through the Exco and the Chinese side,'' Mr Higginson said.