Hangzhou Bay Bridge provides lower returns than expected after five years; bridge’s operator is facing a huge capital shortfall of 850 million yuan (US$138.2 million)
September 24, 2013 Leave a comment
Hangzhou Bay Bridge provides lower returns than expected
Staff Reporter
2013-09-23
The opening ceremony of the Hangzhou Bay Bridge held on May 1, 2008. (Photo/Xinhua)
After putting the 36 km Hangzhou Bay Bridge in east China’s Zhejiang province into service in 2008, the bridge’s operator is facing a huge capital shortfall of 850 million yuan (US$138.2 million), given that only 643 million yuan (US$104.5 million) in tolls was collected during the first half of this year, Guangzhou’s 21st Century Economic Report reports.Toll collection is the only revenue source for the operator of the S-shaped trans-oceanic bridge. Since the bridge started service, there has been a huge gap between the amount of traffic forecast by the research team and the actual traffic on the bridge. As a result, the actual revenues from toll collection have been far lower than expected, leading to a low return on investment, the paper said.
Under such circumstances, the bridge’s attraction for private investors has vanished. “We plan to sell our shares in the Ningbo Hangzhou Bay Bridge Co (the bridge’s operator),” said a spokesperson for China Huanchi Bearing Group, the country’s largest manufacturer of bearings.
When construction of the bridge started 10 years ago, the bearings group invested 100 million yuan (US$16.3 million) in the construction project, making it one of 17 private enterprises that had invested in the project under the Build-Operate-Transfer model.
The enormous investment from private enterprises has made the 10 billion yuan (US$1.6 billion) construction project a model of national transport construction. However, before construction was completed in 2008, several of the private enterprises began to withdraw their capital.
According to figures, at least six trans-oceanic bridges with an investment of 10 billion yuan (US$1.6 billion) have been approved or are under construction, including one with the highest investment of 70 billion yuan (US$11.4 billion).
Despite the setbacks faced with the Hangzhou Bay Bridge, there are further plans to increase the amount of projects, and the total investment in such bridges may soon exceed 200 billion yuan (US$32.5 billion), the paper said. However, the fierce competition for toll revenues rages on among the operators of trans-oceanic bridges around the country, eating away at the profits of the Hangzhou Bay Bridge’s operator.
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