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Hopewell Highway says even construction heavyweights find the Hong Kong-Macau-Zhuhai link's $60b price tag too high

For Hopewell Highway Infrastructure, the proposed Hong Kong-Macau-Zhuhai Bridge -  whose present price tag is $60 billion - could be a bridge too far.

The 20-year dream of chairman Sir Gordon Wu Ying-sheung to link the transport flow in the Pearl River delta with a 36km bridge and tunnel road corridor started at $15 billion.

But now, with the Guangdong and Macau governments calling on private entities to also bear the cost of the networks linking the bridge and main expressways in Guangdong province, it is enough to make anyone blanch.

'Sixty billion dollars is a huge number,'  Hopewell managing director Thomas Jefferson Wu said the company's annual general meeting yesterday.

The company believes only very few heavy-hitting infrastructure firms could bear such a cost.  Even the Hong Kong government has estimated costs could  swell to between $20 billion and $30 billion.

The eye-popping bill has cast a pall over Hopewell's efforts to find partners to compete for the bridge project, which it estimates will cost it 2.62 billion yuan, based on the assumption that its 50 per cent interest would be made up of 35 per cent equity and 65 per cent bank borrowings.

Hopewell plans to take a 50 per cent stake in the  project.

The governments of Hong Kong, Guangdong province and Macau would seek approval from Beijing for the proposed Hong Kong-Zhuhai-Macau bridge project, Chief Executive Donald Tsang Yam-kuen said in his first policy paper last week.

BNP Paribas Peregrine infrastructure analyst Jim Wong said there were concerns that there would be very few players willing to take on such an ambitious and costly project.

Even an extension of the operating period from 30 years to 50 years would add little incentive  and much would depend on how flexible the government could be with its toll fee policy, Mr Wong said.

'From the point of the discounted cash flow model, the value of the last 20 years of toll fee revenue would not be substantial enough to entice investors,' he said.

Hopewell has enough cash to fund the project after boosting reserves to $2.44 billion, partly by arranging an unsecured syndicated loan of $3.6 billion last week. This was in addition to an operating cash inflow of more than $1 billion annually. However, the cost of the project has given  the firm cold feet.

As for other projects, Hopewell has said it was still awaiting government approval to widen the 122.8km GS Superhighway to a dual five-lane expressway.

Thomas Wu said the expansion plan  was now at the screening stage with local municipalities and he hoped to get the green light as soon as possible.

He forecast a 60 per cent rise in traffic flow following construction.

The total investment is estimated to be upwards of $7 billion, depending on how well Hopewell  and its local partners prepared land banks in advance for future development purposes.

The GS Superhighway,  the major expressway directly linking Guangzhou, Dongguan, Shenzhen and Hong Kong, is a fully lit three-lane dual expressway.



Dream project a bridge too far