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Eastern Harbour Crossing toll increase application rejected
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The Governor-in-Council has rejected an application from the New Hong Kong Tunnel Company Limited (NHKTC) to double tolls at the Eastern Harbour Crossing (EHC).
A government spokesman pointed out today (Wednesday) that the proposed toll increases were not approved because the company had so far made net profits in excess of its original projections.
NHKTC had submitted an application to raise private car tolls by $10, or 100 per cent, with similar percentage increases for other types of vehicles.
The NHKTC's reasons for proposing the increases were that inflation and higher interest rates were affecting its profits and that the opening of the Western Harbour Crossing in 1997 would pose a threat to its business.
"Despite the effects of inflation and higher interest rates, the company's cumulative net profits as at the end of 1994 were greater than their original projections," the spokesman said. "In these circumstances, there is no justification for a toll raise."
With regard to the effects on EHC of the opening of the Western Harbour Crossing in 1997, the spokesman said since the EHC had its own catchment areas on the eastern side of the territory, it was unlikely that such traffic would divert to the Western Harbour Crossing, especially in view of the toll differential.
"Also it is likely that suppressed demand for cross harbour journeys will be released when traffic conditions improve following the opening of the Western Harbour Crossing," he added.
"We accept that toll increases are likely to be needed during the life of the franchise so as to allow the company to provide a reasonable return to its shareholders.
"However, such increases can only be supported at a time when the company can clearly demonstrate that it is no longer on target to provide a reasonable return to its shareholders. This is not the case at present," he said.
The NHKTC's application to raise tolls was turned down by the Transport Advisory Committee on September 28.
End/Wednesday, October 25, 1995