Highway charges likely to continue: experts

Shandong announces extension of toll period

Local governments' ambitious plans for highway construction will lead to an extension of the toll period in many parts of China, experts said Monday, after Shandong authorities decided to extend the charging period on 15 major roads.

Tolls were supposed to be removed on a total of 15 expressways in East China's Shandong Province from January 1, 2015, but the charging period has been extended as these roads have not yet paid off the loans built up during their construction, the Xinhua News Agency reported Sunday, citing Shandong transport authorities.

"Some expressways fail to attract enough traffic flows when they are put into operation, so they cannot pay off loans on time and are likely to extend the deadline," Dong Yan, a research fellow with the Institute of Comprehensive Transportation under the National Development and Reform Commission, told the Global Times Monday.

The Shandong Provincial Transport Bureau was not available for comment on Monday. But Fan Zhengjin, deputy director of the bureau, told a press conference on October 25 that stopping charging toll fees would affect the construction of other expressways within the province.

Shandong had run up debts of 58.9 billion yuan just from highway construction by the end of 2013. The provincial government is currently building 270 kilometers of highways with an estimated investment of 19 billion yuan ($3.1 billion). Stopping charging toll fees will affect these projects, according to Fan.

Shandong is not the only province to extend the charging period for highways; other provincial-level regions such as Jiangsu and Xinjiang have also adopted the same move for some of their toll roads.

China allows local governments and companies to finance road construction by bank loans, which is to be repaid by tolls collected over a specified period. According to the country's regulations for toll roads, the charging period for government-backed expressways should be no more than 15 years, and that for commercial expressways should not be more than 25 years.

As a result, China has spent massively in building debt-funded toll roads in recent decades, partly due to local governments' pursuit of GDP growth, Zhao Jian, a professor with Beijing Jiaotong University, told the Global Times Monday.

China has the world's largest expressway network, and the country had 104,468 kilometers of highways by the end of 2013. According to Xinhua, more than 90 percent of these roads are not toll-free, and experts estimate the total toll revenue could reach over 400 billion yuan each year.

But some of the revenue has been misused. The National Audit Office investigated highway projects in 18 provincial-level regions in 2008, and found problems including using toll revenues for property development or stock investment instead of paying off bank loans, as well as offering employees high salaries and bonuses.

The charging periods for about 16,000 kilometers of highways in China are expected to expire in the next two years, Xinhua said, raising concerns that more local authorities will extend the deadline.

Zhao said it is difficult for local governments to stop charging on expressways, as many of them have unveiled ambitious plans for building more highways. Northwest China's Gansu Province, for instance, plans to nearly double its highway network to more than 6,000 kilometers by 2020 from 3,300 kilometers in 2013. "Some local governments have adopted a unified management mechanism on the construction of toll roads, which means as long as one road has not paid off its loans, the charging period on other roads will be extended," Zhao said.

Local authorities should increase the transparency of their highway projects, and tell the public why they are extending the charging period and how long it will last, Dong noted.