In June, the National Audit Office discovered from investigations that 16 provinces and cities set up altogether 158 toll stations on 100 roads against regulations to date, and the corresponding illegal toll charges totaled 14.9 billion yuan up to the end of 2005. 7 provinces and cities raised toll charges, levying an extra fee of over 8.2 billion yuan. Income from toll charges of the 35 profitable roads in 12 provinces (cities) is 10 times or even more of the investment fund.

The Foreign Capital Umbrella

Between 1991 and 1999, the ownership rights of 52 highways in Guangdong were transferred, 35 of which shifted to foreign enterprises mainly from Hong Kong and places like Australia, Malaysia and the Virgin Islands. Up to October 2005, altogether 120 toll stations of profitable roads had some form of foreign investment."

Transferring the rights, changing the legal status, and adding projects are the three typical ways of prolonging the toll period." says Wang Zechu. He adds that among the three, introducing foreign investment is particularly popular. "We've signed with a foreign firm, how can we not fulfill our obligations?" is the most common reply from those concessionaires.

20 million state-owned shares were transferred from a listed company Yue Expressway A(SZ000429), the builder of Jiujiang Bridge in Guangdong, to an engineering company in Ipoh, Malaysia in 1996, just eight years after the bridge's construction. Even though the foreign capital only took up 4.52 percent of the total shares of Yue Expressway A(SZ000429), the company proclaimed that the charging period, which would end after 2 years, was adjusted to 30 years since it had introduced a "strategic investment" from Malaysia.

This is where the advantage of transfers lies: the charging period can be reassessed after the transfer and thus the prior charges are no longer considered.
Such situations happen to bridges and highways all the time. Relative laws in China allow the concession of management rights of those non-profitable roads to enterprises before the government pays off the debt, but in most situations, the transfer fee is actually enough to wipe out the debt.