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Following is a question by the Hon Raymond Ho Chung-tai and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, at the Legislative Council meeting today (November 12):
Question:
It has been reported that CITIC Pacific Limited has incurred huge losses due to the holding of leveraged foreign exchange contracts, and that the company may need to sell its assets to resolve the problem of liquidity crunch. In this connection, will the Government inform this Council whether:
(a) it has considered expeditiously buying, at a reasonable price, the shares of the Eastern Harbour Crossing and the Western Harbour Crossing held by the company, so as to adjust the tolls of the three road-harbour crossings, thereby resolving the long-term traffic congestion problem of the Cross-Harbour Tunnel and its link roads; if it has not, of the reasons for that; and
(b) it has commenced negotiation with the management of the company regarding buying the company's shares of the road-harbour crossings; if it has not, of the reasons for that?
Reply:
President,
The Government is determined to improve traffic flow distribution at road harbour crossings (RHCs) and alleviate traffic congestion in Central and Wanchai, but we will not underestimate the complexities involved. Buying the shares of Eastern Harbour Crossing (EHC) and the Western Harbour Crossing (WHC) held by CITIC Pacific Limited (CITIC) alone would not solve the problem of uneven traffic distribution among the three RHCs and traffic congestion. We need to consider all relevant factors, including the optimal traffic distribution of RHCs, how toll levels should be adjusted, the capacities of connecting roads before the completion of Central-Wan Chai Bypass, the valuation of RHCs, financial implications, future organisational and management structure as well as legal issues. If we buy back the shares of RHCs, a significant amount of government spending will be involved, and the above issues must be considered to account for any decision we will make.
We also have to examine very carefully how the Government may influence the toll regime of the three RHCs for effective traffic management through controlling the shares of the tunnel companies. To illustrate, CITIC holds only 35% of the shares of WHC. Even if the Government bought all of CITIC's shares, it could exert only limited influence on the toll level and operation of the tunnel. As for EHC, even if the Government purchased all of CITIC's shares, it would need to take into consideration the interests of other shareholders.
To conduct a comprehensive analysis, we will commission a consultancy to identify the optimal distribution pattern of traffic flow; the toll regime, financial and asset control arrangements and management structure conducive to such a pattern; and the legal issues to be resolved. A focus of the consultancy study will be valuation of the three RHCs, EHC and WHC in particular. The consultancy will last twelve months.
In parallel, we will also seize the opportunity to continue to communicate with tunnel companies. In fact, over the past few years, we have maintained communication with the shareholders and management of EHC and WHC to explore various options, including buyback, to boost tunnel utilisation.
Ends/Wednesday, November 12, 2008
Issued at HKT 13:31
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