Toll rise: Tate's Cairn Tunnel will raise tolls from August 1.

The Executive Council has approved an increase in the Tate's Cairn Tunnel toll, effective August 1. Route 3 Country Park Section will also raise its tolls on June 19, but concessions for certain types of vehicles will continue on offer.

The Tate's Cairn Tunnel Company applied for an increase in October 2000. Noting the poor economic situation in the past few years, the company agreed to defer its application. The company resubmitted it last October.

In making the decision, the Environment, Transport & Works Bureau noted the company has been suffering losses since the beginning of the franchise in 1988. If no toll increase were allowed, it would achieve an internal rate of return of 3.87%.

Even with the current toll increase, it will only generate an internal rate of return of 4.9% over the 30-year franchise period. Therefore, the toll increase is justified.

Contractual obligation

Secretary for the Environment, Transport & Works Dr Sarah Liao said the increase was in line with normal procedures. She said contractually the Government has to allow the tunnel firm to increase the toll.

"For the Route 3 Tunnel, that has already been approved in the previous application which is according to the contract. It is only that the tunnel company has given a concession in the meantime. And now they want to increase it to a level closer to what has been approved," Dr Liao said.

Toll details are:

* motorcycles - unchanged, at $10

* private cars & taxis - existing: $10, new: $12

* light buses and light goods vehicles - existing: $17, new: $18

* medium and heavy goods vehicles - existing: $20, new: $23

* single deckers - existing: $20, new: $24

* double deckers - existing: $20, new: $26

* extra axle - existing: $13, new: $15

Route 3 to raise tolls

For Route 3, the tolls will go up from $20 - $90 to $25 - $105 on June 19, but concessions will continue to offer to certain types of vehicles.

The actual toll for medium and heavy goods vehicles and motorcycles will remain unchanged. Private cars, taxis and light goods vehicles will have to pay $3 more while public and private light buses, single and double deckers will have to pay $15 more.

The Tai Lam Tunnel & Yuen Long Approach Road Ordinance provides for a specified toll adjustment mechanism in respect of Route 3. 

The franchisee may effect toll increases on certain specified dates (January 1 of 2003, 2010 and 2017). It may also advance the toll increase if its actual net revenue in any year is lower than that in the ordinance.

Revenue down

Since the operation of Route 3 in May 1998, the franchisee's net revenue has consistently fallen short of the specified levels. Hence, under the law, the franchisee would have been entitled to advance all three rounds of toll increase by now.

To date, the franchisee has raised its statutory tolls twice - the first one was made in April 2000 on the basis of the 1998/99 Net Revenue Statement, and the second one in April 2001 on the basis of its 1999/2000 Net Revenue Statement. 

Based on its 2000/01 Net Revenue Statement, the franchisee was entitled to advance the third statutory toll increase to January 1, 2002. Noting the economic conditions at that time, the franchisee agreed to defer the toll increase. Recently, the franchisee decided to bring it into effect on June 19.