Caixin
Mar 23, 2012 07:46 PM

Transport Official Says Tollways to Expand

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(Beijing) – China's tollways are ready for pedal-to-the-metal expansion, according to an announcement by a spokesperson from the Ministry of Transportation.

The debt ratio of China's tollway operations currently sits far below debt limits, said the spokesperson of the Ministry of Transportation, with a hint at more aggressive investments in building yet more roads.

Speaking at a press conference March 22, He Jianzhong said the combined amount of debt for China's tollway industry hit 2.32 trillion yuan in 2011, equivalent to 64 percent of the accumulated investment of 3.65 trillion yuan.

The ratio means the industry still merits bank lending, He indicated, citing that domestic banks use 80 percent as a red line when determining whether to grant loans.

He said the ministry expects intensive road construction for at least another ten years.

Highway construction, in particular, will see a large expansion, He said. The central government has approved the construction of 86,000 kilometers of highways, but only 58,700 kilometers have been built so far. Among the 34 arteries aimed to be constructed, only 7 have been completed.

On the other hand, he stated, investments in road constructions has slipped, dropping by a significant margin of 12 percent in the first two months this year compared with the last.

Research by Caixin suggests that highway firms are already heavily indebted, with some unable to generate enough cash flow to service debt and cover basic road maintenance costs.

In Jiangsu Province, for example, local tollways collected a total of 588 billion yuan but paid more than double the amount for debt services in 2011.

 

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