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Longer concession an option to lower road tolls
Aggregated Source: Shanghai Daily: Business

VICE Minister of Transport Weng Mengyong said the government is considering to extend the concession period for toll road operators in a bid to bring down road charges.

China allowed private investment in road construction and management by introducing the BOT (build-operate-transfer) method. Investors receive a concession to finance, construct and operate roads in the country.

While the public-private partnership helped solve financing for massive road construction boom over the past three decades, the system also resulted in high road tolls that draw constant criticism.

"Roads are major public infrastructure and the government has to get involved," Weng said at a forum yesterday during the annual summit of the Organization for Economic Cooperation and Development in Leipzig, Germany. "But the market force is getting a bit too big. That has led to high tolls, public dissatisfaction and rising logistic costs."

China's highway network may expand to 130,000 kilometers by 2030 from about 98,000 kilometers now, Weng said. About 20 percent of the existing highways are funded by the central government, the rest by the private sector or local governments.

"So we must adopt a system that not only prevents operators from reaping windfall profits but also protects their interests," Weng said. "One way is to increase the proportion of public spending and the other is to extend the concession period for investors."

China normally grants a 15-year concession to road operators though it is often not strictly followed. For example, Hujia Expressway, the first toll road in the mainland linking downtown Shanghai and suburban Jiading District, opened in 1988 and did not stop collecting tolls until last year.

Weng said he is confident that China can solve the problem in the long run and set a good example for others to follow.

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Copyright Shanghai Daily: Business