Protests push HK-Zhuhai bridge to heavy losses

Mark O'Neill November 01, 2019 08:30

The five months of protests in Hong Kong have contributed to the Hong Kong-Zhuhai-Macao Bridge Authority posting a loss of 1.9 billion yuan in its first year of operation, with traffic less than half official predictions.

The bridge was opened by President Xi Jinping, with great fanfare, on October 24, 2018 -- the first land link between Hong Kong and the western Pearl River Delta (PRD) at a cost of HK$120 billion. At 55 kilometers, it is the longest cross-sea bridge in the world.

But traffic during the first year averaged 4,115 vehicle/trips per day, compared to official forecasts of 9,200-14,000 in 2008. That meant an income from tolls of 280 million yuan, compared to annual running costs of 2.2 billion yuan.

This consists of 220 million yuan in maintenance costs, 65 million yuan for major repairs, 37 million yuan in wages for staff, 930 million yuan in interest payments and 900 million yuan for depreciation. This left a loss for the year of 1.9 billion. It is not clear who will pay this loss; will it be shared among the three governments which invested in the bridge?

The shortfall in traffic is due to several factors. One is the restriction on vehicles allowed to use the bridge. They must have licences allowing them to drive in Hong Kong, Guangdong and/or Macao and meet strict criteria; this rules out the vast majority of vehicles on the road in the three places.

Another is the sharp fall in tourism to Hong Kong since the protests began in June, especially the drop in mainland visitors.

A third is the high toll fees – 200 yuan for buses – and the need to assign more staff to manage two immigration checkpoints at either end of the bridge. The Hong Kong Guangdong Boundary Crossing Bus Association said that 10-20 percent of bus routes over the bridge had been cancelled, due to these costs, higher than going to Shenzhen. It said that everyone had been disappointed by the new bridge.

The outlook is not good. A new bridge between Zhongshan and Shenzhen is under construction and due to go into operation in 2024. It is 32 kilometers north of the HKZM bridge. It will be quicker and cheaper than the HK-ZH bridge and enable firms in the western PRD to deliver goods to Hong Kong more economically.

In addition, the cities of Zhuhai and Shenzhen are discussing construction of a bridge between them, to land in the Qianhai district and which will include a high-speed railway, which the HKZM bridge does not have.

Qu Jian, Vice President of the China Development Institute in Shenzhen, said the low traffic flow on the HKZM bridge showed it was a failure. This was because of a major flaw in its design – no link to Shenzhen, he said.

To increase traffic flow on the bridge, the Hong Kong Transport Department announced on October 24 that it would increase the quota for dual-plate Hong Kong cross-boundary private cars by 5,000.

But the criteria are very restrictive – HK, Macao, Taiwan or foreign investors who have paid at least 100,000 yuan in taxes in Guangdong in the past three years: HK residents who are members of the People’s Congress and CPPCC at the national level or provincial, prefecture and county level of Guangdong: individuals who have donated a total of three million yuan to charity or social organizations who have donated a total of 10 million yuan. This will not lead to a significant increase in traffic.

One winner from the bridge has been cargo. According to the mainland press, as of the end of September, goods worth US$8.4 billion had been moved across the bridge; of this, over 90 percent came from Zhuhai and the rest from other provinces in China. An average of 300 cargo vehicles use the bridge each day.

It has been less useful to companies in Hong Kong. Freight from the city to the west bank of the PRD accounts for only 5 percent of Hong Kong’s total freight.

The bridge is useful to Macao and Zhuhai in offering an alternative route for visitors and gamblers from Hong Kong, one that is cheaper than the ferry service.

Hong Kong Airport is building an Intermodal Transfer Terminal, linked to the Hong Kong boundary crossing facilities by a 360-meter bonded vehicular bridge. Next to the SkyPier and due for completion in 2022, it will eliminate the need for air passengers arriving or departing via the bridge to clear immigration in Hong Kong.

Supporters of the bridge say its value cannot be judged in the short term and that it is a national strategic project and a key element of the transport network of the Greater Bay Area. They argue that its value must be assessed over a 10- or 20-year period.

From the vantage of November 2019, however, it is hard to see how the bridge can be profitable and pay back its Pharaonic investment.

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RC

Mark O'Neill

A Hong Kong-based writer, teacher and speaker.