Ordinary Gweilo

Yesterday there was one of those rather pathetic protests we sometimes get in Hong Kong.  The picture in the SCMP shows less than twenty cars driving slowly up to entrance of the Eastern Harbour Tunnel, thus delaying a few motorists out for a drive on a Sunday morning.  They are complaining about the plans to increase the toll for the from HK$15 to HK$25.  From The Standard:

In 2002, the New Hong Kong Tunnel Company, which manages the Eastern Harbour Crossing, applied for an increase. The Chief Executive-in-Council rejected the application.  In August 2003 the company sought arbitration and in January a HK$10 increase was agreed.

Hong Kong has three road tunnels under Victoria Harbour.  The oldest is the one from Hung Hom to Causeway Bay (known simply as the Cross-Harbour Tunnel) which is now owned by the government.  The newer Eastern and Western tunnels are owned and operated by the private companies that developed them, but will eventually pass to the government.

The central location of the original tunnel makes it the most popular, and although the government doubled the toll for private cars when it took control, the operators of the other two tunnels have increased their prices so that it will soon be the cheapest again, presumably further increasing congestion.

As Jake van der Kamp pointed out last week, the directors of New Hong Kong Tunnel are entitled to raise charges, and the arbitration process has actually allowed them a bigger increase than the one originally rejected by the government.  The point is that in 11 years the company will have to surrender its only asset to the government, so they have to get a return on their original investment by the tolls they collect.  The government cannot have it both ways – if they wanted to control the tolls they should have invested public money in the project rather than entering into this type of arrangement.

There seems to be a feeling that the government should “do something”, but the only thing they can do immediately is raise the toll for the Cross-Harbour Tunnel, and they appear to have ruled that out.  One argument against an increase is that it will benefit the other two operators and reward them for their decision to increase tolls.  However, it remains the logical thing to do because there is spare capacity in the other two tunnels whereas both Hung Hom and Causeway Bay get very congested with all the traffic using the Cross-Harbour Tunnel.

Yet it seems that the government is considering other options.  The Standard again:

The Hong Kong government, in the midst of attempting to privatize large segments of its transport, housing and other holdings, may reverse policy and seek to buy back two cross-harbor tunnels it has privatized.  Buying back the Eastern and Western tunnels is one option being considered by the government in an attempt to solve the toll controversy and ease public irritation over sharply rising toll charges.

Government planners are studying three options: buying back the Western and Eastern tunnels, disposing of the government’s interest in the badly congested Cross-Harbour Tunnel, or holding shares in all three.

Buying the other two tunnels so that they can reduce the tolls?  It’s madness, I tell you! 

Yesterday’s protest was a waste of time, because the govermment has already said they will look at what options are available, but the only thing they can do immediately would not be popular with the protestors anyway.  In a year or so the government will report back that they have decided to do nothing, but everyone will have forgotten about it by then.