Toll Road Development in China: Highlights in Practice

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1 Toll Road Development in China: Highlights in Practice Xiaoxia Yao September 11, 2012

2 Outline Evolution and Current Development Challenges and Issues Missions Ahead

3 Toll Road Network of National Arterial Highway Total length of toll roads in China is over 155,000 km.

4 Data Source: Transportation Statistics Intensive Construction Programs Unit: Ten thousand kilometers In the past 15 years, more than 1 kilometer toll road was constructed per hour, and 24 kilometers per day

5 Composition of Toll Road 0.6% By the end of % 16.8% 47.7% Expressway Class Ⅰ Class Ⅱ Bridge and Tunnel Nearly 99% of the expressways, 41% of the firstclass highways, and 18% of the second-class highways are toll roads.

6 Toll Road Classification of Toll Road Loan Repayment Toll Road (LRTR), state-owned Commercially Operated Toll Road(COTR), PPP Tolling period for LRTR: maximum 15 years for COTR: maximum 25 years

7 Toll road Class Ⅱ Toll Road loan repayment toll road(lrtr ),state-owned commercially operated toll road(cotr),ppp LRTR charge deadline is maxium15 years, in West area the period can extent 5 years COTR is 25 years, in West area it can reach 30 years

8 Two Types Complementing Each Other LRTR COTR By the end of % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mileage Collector Revenue

9 Toll Rate Passenger car tolls average 7.1 cents on expressway, ranging from 4.7 to 9.5 cents (U.S. $) per kilometer Cents East Middle West Trucks are tolled according to load weight. The rates vary from 0.94 to 1.26 cents per ton-kilometer

10 Highway Financing Company Investment 7.8% Others 3.0% Government Budget 1.5% National Debt 0.3% Vehicle Purchase Fee 12.5% Local Funding 35.5% Domestic Bank Loan 39.4% 2010 Highway Construction Financing Structures

11 Debt of Toll Roads by the end of Unit: billion US$ Total debt of toll roads is 360 billion US$ debt others total expressway class Ⅰ class Ⅱ bridges and tunnels

12 Challenges and Issues (1) Tremendous Toll Road Development and Outdated Technology on Toll Collection Increased travel costs Traffic congestion Substantial traffic diversion to older free facilities High financing costs and risks Lack of Transparency and Public Involvement Lack of transparency in asset valuation and bidding process Toll revenue earmarking Intense criticism and negative attitudes towards tolling

13 Challenges and Issues (2) Lack of Mature Legal and Regulatory Framework Conflicting rules, not clearly defined responsibilities across functions Unclear government policies on public and private financing No professional toll collection auditing system Weak enforcement of toll road policies Fragmentation of ownership and excessive segmentation Sustainable Financing Schemes Needed Heavy debt for stated-owned toll facilities Unbalanced financial structures Inefficient road maintenance fee collection

14 Solutions---1 To improve legal systems and regulations Toll road policies: Objectives to be adjusted; More transparency and public involvement Regulations Concerning Toll Road Management: To be revised Rules to better allow concessionaire operation: Already under consideration

15 Solutions---2 Control of development scale : The central government plans to revoke class Ⅰ toll roads step by step in future Solutions---3 Integration of toll collection management Solutions---4 Promote ETC

16 Contributions and Lessons Remarkable accomplishment in toll road development, improved transportation mobility Innovative highway financing, foundation for future transportation infrastructure development Facilitated economic growth Development of private participation, complementary nature of state toll authorities and PPPs

17 To be rich, build road first. (farmers in China say) Toll Roads the Secret of Road Development Thanks! Xiaoxia Yao Transport Planning and Research Institute Ministry of Transport, China