On February 27, 2008, the freeway linking Hefei, Chaohu and Wuhu cities in Anhui Province was cited in a report by the National Audit Office (NAO) as a negative example depicting a huge loss of state assets in the process of changing managerial authorities.
"The Anhui provincial government sold the Hefei-Chaohu-Wuhu freeway at below its fair market value (in 2003) and re-purchased it at a much higher price two and a half years later, incurring a loss of 1.24 billion yuan," the NAO report stated.
The transfers of the freeway's managerial rights also remain a riddle for Zhang Li, a former toll booth monitor along the highway before it was sold in 2003. "The highway was sold for 1.9 billion yuan (in 2003) and bought back at the much higher price of 3.58 billion yuan two years later. It was like a bad joke," Zhang said.
According to Zhang, the highway was making a 40 percent year-on-year profit growth rate at that time. "Yet why was it sold?"
In a footnote to the problems existing in expressways, the NAO report said: "The bidding process for some highways is just a mere formality and many of them are sold at reduced prices without doing a required evaluation. This leads to a huge drainage in state assets."
1.9 billion yuan for a highway
Stretching 100 kilometers long and four lanes wide, the Hefei-Chaohu-Wuhu freeway is now a vital transportation lifeline linking Anhui Province with the developed coastal provinces of Jiangsu and Zhejiang.
Completed in 1995, it is Anhui's second highway. In 2003, the provincial government sold the managerial power of the road to Jiangsu-based Oriental Holding Group Company. The deal made its way into China's top 10 merger cases that year.
"At the time it was sold, the highway was only a bumpy cement road and was nothing compared with what it looks like now," said Liu Wenhui, who was then the director of secretariat of Anhui Highway Company.
Liu attributed the low quality of the road to tight government finances. Overloaded trucks carrying coal from north China to the south also contributed to the deterioration of the road, Liu explained.
In around 2000, the provincial government decided to beef up road construction in order to promote its economic development. However, cash-strapped, it finally came up with the funding strategy of "selling old roads and building new ones."