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A deal or a steal?
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The NAO said in its February 27 report that the loss of state assets in the case of the Hefei-Chaohu-Wuhu Expressway was largely caused by Anhui provincial government's underestimation of the value of the expressway and its repurchase two and a half years later at higher price.

However, lawyer Song said the transfer of the expressway was actually a win-win-win scenario for the State, the local government and private enterprise.

"For the Anhui provincial government, the repurchase of the appreciating expressway prevented further losses of state assets," said Song. "Anhui Expressway Company can also make big profits by regaining managerial rights of the highway."

Liu of Anhui Expressway said although the company bought back the managerial rights of the highway with 1 billion yuan more than the selling price, but based on current profitability, it can be back in the black within four years.

Liu thought it was a good deal to sell the expressway when it was experiencing losses. In 2001, toll collection from the expressway was only 42 million yuan and 80 million yuan in 2002. "The proceeds could hardly cover the maintenance expenditures."

He believed repurchasing the expressway had saved the company more than 3 billion yuan.

The transfer of the managerial rights has also extended the toll period of the highway by 28 years.

Before it was sold, the government repaid the road loans and according to relevant regulations in China, the toll period cannot exceed 15 years for such kind of roads. The Hefei-Chaohu-Wuhu Expressway was due to terminate its tolls on December 31, 2005.

However, after the Oriental Holding Group assumed control over the road, it became a commercial road (defined as roads constructed with the investment of economic organizations both home and abroad) with its toll period extended to May 1, 2033.

Even after the repurchase, the provincial government still has the authority to collect freeway tolls as a commercial road until 2033.

(Source: The Beijing News, translated by Yuan Fang for China.org.cn, March 4, 2008)

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