http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20150101000104&cid=1502

Operators of Chinese expressways live life in the fast lane

Staff Reporter

2015-01-01

Losses of over 60 billion yuan (US$9.6 billion) were recorded for the Chinese government while operating the country’s expressway network in 2013, yet the 19 listed expressway operators actually recorded a net profit margin growth of 20.59%, the Beijing Youth Daily reports.The total amount of expressway toll charges collected in 2013 reached 331.6 billion yuan (US$53 billion), which represents losses of 61.7 billion yuan (US$9.9 billion), according to the country’s Ministry of Transport.

This is the first time the ministry has published such data, and the heavy losses have been a hot topic among road users, who have criticized the toll charges as several local governments had announced an extension of the period of charges earlier in the year, the newspaper said.

Despite such losses on paper, the newspaper found that the 19 publicly listed companies involved in expressway operations recorded an operating net profit margin of 31.6% during the first three quarters of this year, and a 20.59% growth in net margin growth.

Among them, Chongqing Road and Bridge posted the best performance with its operating gross margin of 89.65%, followed by Jilin Expressway’s 74.78%, the newspaper said.

Apart from toll fees, these operators’ income also comes from sources such as government subsidies, the newspaper said.

One of the ways operators can be awarded subsidies via the construction of new expressways.

Jiangxi province had earlier decided to provide subsidies for two expressways operated by Jiangxi Ganyue Expressway, since some newly proposed expressways have recently been approved. Beginning in 2015, the province will pay the company subsidies based off of the two existing roads’ toll income and economic growth, as remedies.

The policy for building expressways on loans and repaying the loans with toll fees has led many local governments to extend the period of toll charges beyond the 15 or 20 years allowed under current rules, citing the need for funding for construction of new expressways as the reason.

Yet such practices create a situation where unnecessary expressways are given approval yet see little traffic after completion, such as the western coastal expressway of Guangdong province, which only collects 1 million yuan (US$160,600) in toll fees a day, an unnamed industry insider said.