The new financing option for the Hong Kong-Zhuhai-Macao Bridge will give the government more authority in deciding the tolls, a government source and experts said yesterday.

The source, explaining the details of the new financing option, said the build-operate-transfer (BOT) mode drawn up by Guangdong, Hong Kong and Macao governments in February is not conducive to maximizing the social benefit of the bridge.

Under that option, the three governments would inject 6.69 billion yuan for the construction of the main body of the bridge, which was expected to cost about 30 billion yuan. The bidder would need to invest 8 billion yuan and secure 22 billion bank loans.

The investment is risky for the bidder as the three governments have not reached a consensus on policies that will facilitate the use of the bridge, including lifting the quotas on cross-border vehicles.

"We cannot prepare the bidding document unless we have agreed on such policies," the source said. "Without tackling such policy issues, it is difficult for the bidders to estimate the economic benefit and rate of return of the bridge."

Hong Kong Baptist University finance assistant professor Billy Mak said usage of the bridge will be affected under the BOT option.

"The successful bidder may ask for a higher rate of return, which is not conducive to attracting users and strengthening cooperation among the three cities," he said.

Lau Ching-kwong, an engineer, expected that the toll can be reduced by 10 percent under the new financing arrangement.

But the government source said it is too early to estimate whether the toll will be lower. The toll will be decided by a company run by the three sides, which will operate the bridge on a self-financed basis and use the toll income to pay up the bank loans.

The structure and organization of the company are yet to be studied by the three governments. The study will also determine the responsibility and leverage of the each government in operating the bridge under the new financing option, in which the proportion contributed by Hong Kong is reduced.

Under the BOT option, Hong Kong will pay 3.36 billion yuan for constructing the main body, which is 50.2 percent of the total cost to be shared by the three governments. Guangdong will contribute 2.35 billion yuan, or 35.1 percent, and Macao will contribute 9.8 billion yuan, or 14.7 percent of the cost.

Questions on which government has the biggest say in the bridge operation have been raised as the proportion contributed by Hong Kong will be reduced to about 42 percent, while contribution by mainland and Macao will increase to 44.5 percent and 12.5 percent respectively.

The government source explained that the increase of proportion by the mainland is mainly because the central government has decided to inject capital in addition to the investment by the Guangdong government.

The source said the central government merely wants the project to be implemented earlier, and officials have not considered the leverage issues.

The bridge will be operational in 2016 if the construction starts in 2010.

(HK Edition 08/06/2008 page1)