China's toll road losses double in 2015

BEIJING - China's toll roads reported losses of 319 billion yuan ($48 billion) in 2015, more than double the loss made in 2014, due to a sharp rise in loan repayments, a report said Tuesday.

Tollgates nationwide posted a total revenue of 410 billion yuan last year, higher than the 392 billion yuan registered in 2014, according to a Ministry of Transport (MOT) annual report. However, any increase was dwarfed by expenditure, which stood at 729 billion yuan, in contrast to 549 billion yuan the previous year.

Nearly 80 percent of expenditure last year went on loan repayments, while the remaining 20 percent was spent on road maintenance, management, upgrading facilities and taxes.

There were 1,588 tollgates in China last year, down from 1,665 in 2014. Total fee exemptions reached 54.5 billion yuan, accounting for 13.3 percent of gross revenue in 2015. Operating expenditure dropped 1.2 percent.

Highways account for 71.2 percent of China's toll roads, which cover over 164,000 kilometers. Spending on toll roads has almost reached 7 trillion yuan, with a debt balance of 4.45 trillion yuan, said the report.

In order to narrow the capital gap, speed up improvements to road networks and provide a better service, the MOT published guidelines in May last year to encourage public-private-partnerships in toll road construction.

Toll roads and the related logistics industry are increasingly important for China. In August, the MOT began to cut logistics costs and improve efficiency, aiming to build a transport and logistics service system based on convenience, efficiency and high-quality by 2020.

The guidelines propose diverse transport links, optimizing rural logistics and increasing cross-border transportation to support urbanization, regional integration and the Belt and Road.

Yu Mingyuan, an MOT researcher, said toll roads and toll-free roads are both necessary. "The country should make 97 percent of its roads toll free with the remaining 3 percent tolled, and providing a different service for the public."

"Road construction, especially highways, relies on funds raised through toll roads as the central budget can only stretch so far," said Li Yutao, a researcher from the National Development and Reform Commission.

Debt risk on toll roads is under control. Not only was 225 billion yuan of interest paid in 2015 but also 31 billion yuan of principal was repaid.