Shanghai government is opening up more large infrastructure projects to private investors from China and abroad, senior government officials said on March 26 after announcing the first significant private investment in the management of a major local expressway.
Shanghai Urban Construction Investment & Development General Corp, which is responsible for raising and managing capital for local urban construction projects, leased its 99.35 percent stake in Shanghai Road & Bridge Development Co Ltd, operator of the local portion of the Shanghai-Hangzhou Expressway, to privately-funded Fuxi Investment Holdings Co Ltd for 3.2 billion yuan (US$385 million) in a deal signed on March 26.
"By transferring our stakes in the existing infrastructure facilities to private investors, we will have more capital to facilitate new projects and accelerate our pace of development," said Gao Guofu, general manager of Shanghai Urban Construction.
Shanghai has pledged to invest 52.4 billion yuan (US$6.4 billion) in major infrastructure projects this year. To date, the local government has raised most of that money through bank loans and bond issues.
"The new policy goes well with the central government's call to encourage the utilization of domestic private capital to facilitate the country's economic growth," Gao said.
The deal allows Fuxi Investment Holdings to operate the Shanghai portion of the Shanghai-Hangzhou Expressway for 30 years.
That portion of the expressway is more than 50 kilometers in length starting in Minhang District and ending at Fengjing Town in Jinshan District.
Fuxi is also responsible for expanding the highway from its current four lanes to six lanes as traffic volume increases. Once the new lanes are added, the artery will be able to handle 40,000 vehicles per day.
In return for its investment, Fuxi will be allowed to charge a toll on all vehicles using the thoroughfare.
With registered capital of 500 million yuan (US$60.24 million), Fuxi is a privately-funded investment company with diversified interests covering infrastructure and media.
So far, about 23.5 billion yuan (US$2.83 billion) of private capital has been invested in local infrastructure projects, with most of it used to fund highways, tunnels and bridges.
"We are very confident we will earn steady rewards from the Shanghai-Hangzhou Expressway operation as we believe a rapidly growing city like Shanghai will certainly require more links between the city and other parts of the country," said Zhang Rongkun, chairman of Fuxi Investment. "In addition, booming private-car sales across the country will also boost our future business."
(China Daily March 27, 2002)
