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43-637: The Western Harbour Tunnel Company Limited (WHTCL) 香港西區隧道有限公司 is a jointly owned entity engaged principally in the construction, maintenance and operation of the Western Harbour Crossing (WHC) in Hong Kong . Founded in 1992, WHTCL owns the franchise to build and operate the WHC from 1993 up till 2023. The 30-year franchise, under a build, operate and transfer contract with the Government of Hong Kong , includes

86-402: A BOT project the project company or operator generally obtains its revenues through a fee charged to the utility/ government rather than tariffs charged to consumers. A number of projects are called concessions, such as toll road projects, which are new build and have a number of similarities to BOTs. In general, a project is financially viable for the private entity if the revenues generated by

129-530: A cash offer to acquire the 50% interest in the WHTCL from CHHL. Lanyon cited this was in the best interest of CHHL shareholders. CHHL rejected this offer on 11 June 2019. The project team consisted of John Mundy (project manager), John Porter of Nishimatsu (project director), Kazutoshi Torakai of Kumagai Gumi (technical director), K.C. Tsui (JV construction manager for the mechanical and electrical works), Sandy Hone (JV deputy project manager and construction manager for

172-569: A few US states ( California , Florida , Indiana , Texas , and Virginia ). However, in some countries, such as Canada , Australia , New Zealand and Nepal , the term used is build–own–operate–transfer (BOOT). The first BOT was for the China Hotel , built in 1979 by the Hong Kong listed conglomerate Hopewell Holdings Ltd (controlled by Sir Gordon Wu ). BOT finds extensive application in infrastructure projects and public–private partnership . In

215-601: A joint venture company. Western Harbour Crossing The Western Harbour Crossing ( WHC ) is a dual three-lane immersed tube tunnel in Hong Kong . It is the third road tunnel to cross Victoria Harbour , linking reclaimed land in Yau Ma Tei in West Kowloon with Sai Ying Pun on Hong Kong Island . It was constructed by the Western Harbour Tunnel Company Limited (WHTCL), which also operated

258-738: A new airport in a busy metropolis. BLT stands for build-lease-transfer, in which the public sector partner leases the project from the contractor and also takes responsibility for its operation. ROT (renovate-operate-transfer) is a procurement method for infrastructure that already exists but is performing substandardly. As you know, when essential services are no longer operating efficiently or effectively, repairs can be costly. When an obsolete facility or amenity (any public service such as telephone lines, etc.) becomes outdated and requires expensive repairs, it can be financed through public-private partnerships between public entities and private contractors that are able to provide renovation services and operate

301-415: A profit from your project. While you manage your contract, you generate profit by charging fees from the users of your project, and you have the project as an asset. While the risk is yours, this risk is offset by various government incentives, funding, tax breaks, money to hire select people (such as unemployment job initiatives), and any other benefits that the regulatory body sees fit to grant you. At

344-402: Is also known as design-build. Modified versions of the "turnkey" procurement and BOT "build-operate-transfer" models exist for different types of public-private partnership (PPP) projects, in which the main contractor is appointed to design and construct the works. This contrasts with the traditional procurement route (the build-design model), where the client first appoints consultants to design

387-499: Is different from the BOT (build-operate-transfer) delivery model, in which the private party does not own the project as an asset; they only receive a concession to operate it for a period of time. The BOOT delivery model is different from classical PPP (public-private partnerships) models which refer to project agreements where a private entity takes over the building and operation of government-owned infrastructure. Build-own-operate-transfer

430-471: Is often the best kind of delivery model, in which a private sector party, or consortium, receives a mandate from a private or public sector client to finance, design, construct, own, and operate a long-term project. If you have been awarded a BOOT contract, this means that during that time period, you, the private party or your consortium, own and operate the facility. Your goal is to recover the costs of your investment, operations, and maintenance, and also make

473-414: Is one of the sponsors of this event. Started from 2001, the tunnel southbound route was closed and used as one of the routes in the game. Hong Kong Cyclothon is another sport event sponsored by Sun Hung Kai Properties and supported by Hong Kong Tourism Board . This event launched on 2015. Western Harbour Tunnel southbound tube was one of the routes in the game. After the game in 2015, the event arranged

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516-572: The Government of Hong Kong buy back the tunnel from the current owners of the tunnel, WHTCL, so that it can control tolls and ease traffic congestion in the Cross Harbour Tunnel area. To that end, lawmakers passed a non-binding motion in 2008 for the HK Government to address the situation. However the consultant hired by the Government to find a solution to the traffic problem did not suggest

559-677: The Route 3 designation from the West Kowloon Highway and connects to Route 4 on Hong Kong Island. By the early 1980s, commuters made 120,000 trips at the Cross-Harbour Tunnel (CHT) every day, beyond its designed capacity of 80,000 daily trips. Population growth was also projected to reach 6.34 million in 2001 from 5.125 million in 1981. The Hong Kong government launched the Second Comprehensive Transport Study in

602-458: The BOT framework a third party, for example the public administration, delegates to a private sector entity to design and build infrastructure and to operate and maintain these facilities for a certain period. During this period, the private party has the responsibility to raise the finance for the project and is entitled to retain all revenues generated by the project and is the owner of the regarded facilities. The facility will be then transferred to

645-588: The Western Harbour Crossing have lower tolls. The consultants said that lowering tolls would result in a very high increase in traffic volume, with severe congestion on the exit to Route 4 during rush hour. This solution would only be possible when the construction of the Central–Wan Chai Bypass is completed. After the 30 year franchise expired in August 2023, the Government, as the new owners of

688-505: The Western Harbour Tunnel Company to build and operate WHC. WHTCL's largest shareholder is The Cross-Harbour (Holdings) Limited (CHHL), which has a 50% stake. Its other shareholders are CITIC Limited and Kerry Properties Limited , which hold 35% and 15% effective interests in WHTCL respectively through a joint venture company. On 5 June 2019, an Australian-based fund manager, Lanyon Asset Management Pty Limited, made

731-404: The civil works), Knud Poulsen (engineering manager), Alex Peling (commercial manager), Robert Lloyd, Eric Granville and Don Ramanaynke (the Government's Highways Department Western Harbour Link Office engineers). The project cost was HK$ 7.5bn, funded privately. The project was completed in 1997. The pipe itself is 2 km long. The initial toll for private cars projected by the consortium

774-504: The consortium. Underlying that were fears the consortium and its banks may withdraw from the project, so wanted the bill voted through as a package. One week before the final LegCo vote on the deal, in response to legislators' fears, the Liberal Party proposed an amendment that both the Government and the consortium found to be an acceptable compromise: to preserve the HK$ 30 opening toll, but

817-401: The construction and operation of tunnel. Having decided to rely on the private sector, the government opted for a build–operate–transfer (BOT) model, for 30 years. Tenders for the project were invited, and was won by the Western Harbour Tunnel Company (WHTCL). The franchise was awarded for 30 years, ending August 2023. The Western Harbour Crossing Bill was also passed to award the franchise to

860-529: The contractors of the CHT team were dropped. At the close of the tender, the Government was disappointed that there was only one bidder. Upon this news, two new consortia of construction companies proposed to build the project for the Government if the Government decided to pull the tender and run the project itself. In 1993, the Western Harbour Crossing Ordinance (Cap. 436) was enacted to govern

903-409: The design and construction of the work to the employer’s requirements, the contractor is also responsible for operating and maintaining the completed facility. The operation and maintenance period will span decades, during which time the contractor is said to have the "concession," is responsible for the operation of the facility, and benefits from operational income. The facility itself, however, remains

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946-437: The development and then a contractor to construct the work. The private contractor designs and builds a facility for a fixed fee, rate, or total cost, which is one of the key criteria in selecting the winning bid. The contractor assumes the risks involved in the design and construction phases. Turnkey procurement under a design-build contract means that the design-build team would serve as the owner’s representative to determine

989-428: The end of the contractual period (typically in the order of decades), ownership of the construction is given back to the state (or federal actor). You may receive a fee for this transfer. The scale of investment by the private sector and type of arrangement means there is typically no strong incentive for early completion of a project or to deliver a product at a reasonable price. This type of private sector participation

1032-481: The expertise and efficiency that the private entity is expected to bring as well as the risk transfer . Therefore, the private entity bears a substantial part of the risk. These are some types of the most common risks involved: The BOOT procurement strategy utilizes project finance to fund large-scale greenfield infrastructure projects such as local power stations, water treatment facilities and sewage facilities, or transit infrastructure, etc. The BOOT delivery model

1075-399: The financing, design, construction, commissioning and operation of the WHC. WHTCL's single largest shareholder is The Cross-Harbour (Holdings) Limited 港通控股有限公司 SEHK: 0032, holding a 50% stake in WHTCL. Its other shareholders are CITIC Pacific Limited 中信泰富有限公司 SEHK: 0267 and Kerry Properties Limited 嘉里建設有限公司 SEHK: 0683 which hold 35% and 15% effective interests in WHTCL respectively through

1118-416: The franchisee to apply for an increase its tolls on six specified dates during the franchise period depending on revenues achieved. Toll increases and revenue appropriation according to following scenarii were envisaged: 2 Aug - Due to severe congestion experienced at the Cross Harbour Tunnel and the feeder roads to the WHC, there were calls for reduced tolls at the Western Harbour Crossing by letting

1161-501: The franchisee to maintain the target rate of return of between 15% and 18.5%. The operator could also increase the tunnel toll by HK$ 10 whenever its IRR fell below 15%. Legislators, principally from the pan-democrat camp but including the Liberal Party, criticised the mechanism as being too generous in favour of the franchisee and were unwilling to approve the deal. The government feared that revision at LegCo would adversely impact project viability and force re-opening of negotiations with

1204-680: The late 1980s, which said cross-harbour trips would increase greatly – person-trips would increase by 86% from 1.4m to 2.6m, and goods-vehicle-trips by 129% from 34,000 to 78,000 by 2001. Also, with the development of the Hong Kong International Airport , it was to be an important component of the strategic Airport Core Programme linking it to the Kwai Tsing Container Terminals and Hong Kong Island. There are 10 km of associated roads (40 km of lanes) and 17 bridges. The Government announced in 1990 that

1247-508: The long-term nature of the arrangement, the fees are usually raised during the concession period. The rate of increase is often tied to a combination of internal and external variables, allowing the proponent to reach a satisfactory internal rate of return for its investment. Countries where BOT is prevalent are Thailand , Turkey , Taiwan , Bahrain , Pakistan , Saudi Arabia , Israel , India , Iran , Croatia , Japan , China , Vietnam , Malaysia , Philippines , Egypt , Myanmar and

1290-543: The project are combined under one private contractor. Hart (2003) argues that under bundling incentives to make cost-reducing investments are larger than under unbundling. However, sometimes the incentives to make cost-reducing investments may be excessive because they lead to overly large reductions of quality, so it depends on the details of the project whether bundling or unbundling is optimal. Hart's (2003) work has been extended in many directions. For example, Bennett and Iossa (2006) and Martimort and Pouyet (2008) investigate

1333-415: The project cover its cost and provide sufficient return on investment . On the other hand, the viability of the project for the host government depends on its efficiency in comparison with the economics of financing the project with public funds. Even if the host government could borrow money on better conditions than a private company could, other factors could offset this particular advantage. For example,

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1376-420: The project management after the repairs have been completed. In contract theory , several authors have studied the pros and cons of bundling the building and operating stages of infrastructure projects. In particular, Oliver Hart (2003) has used the incomplete contracting approach in order to investigate whether incentives to make non-contractible investments are smaller or larger when the different stages of

1419-535: The project started looking for partners to form consortia. The formal tendering exercise was launched in March 1992 and ended in early July 1992. In early 1992, two consortia appeared to be vying for the contract. However, one week before the closing date for tenders, Cross Harbour Tunnel Company and CITIC decided to merge their bids. Cross Harbour Tunnel Company, with Wharf Holdings as its major shareholder, dissolved its own consortium in favour of joining with CITIC group;

1462-413: The project, while the client finances the project and retains ownership. DBFO stands for design-build-finance-operate, which also assigns the responsibility to the private organization to design, build, finance, and operate. Financing your competitive project may be easy when there is a high demand for a service right now, and investors will throw money at any project that claims the spoils, such as opening

1505-438: The property of the employer. A DBO(design-build-operate) contract is a project delivery model in which a single contractor is appointed to design and build a project and then to operate it for a period of time. The common form of such a contract is a PPP (public-private partnership), in which a public client (e.g., a government or public agency) enters into a contract with a private contractor to design, build, and then operate

1548-405: The public administration at the end of the concession agreement , without any remuneration of the private entity involved. Some or even all of the following different parties could be involved in any BOT project: A BOT project is typically used to develop a discrete asset rather than a whole network and is generally entirely new or greenfield in nature (although refurbishment may be involved). In

1591-412: The return on investment would be capped at 16.5% (instead of 18.5%) for the first three years after the tunnel opened; amounts above that would be transferred the toll stability fund to reduce the need for future toll rises. On 21 July 1993, the legislative council approved by 35 to 19 the amendment proposed by the Liberal Party. Any changes in tolls must be gazetted. The toll adjustment mechanism allows

1634-456: The route. In the past few years, Lin Cheung Road and slip of West Kowloon Highway were closed to facilitate the races. Based on the road closure on nearby roads, Western Harbour Tunnel had relevant road arrangement. As of 2019 , there are 75 bus routes passing through the tunnel. Build%E2%80%93operate%E2%80%93transfer BOT is usually a model used in public–private partnerships . Due to

1677-402: The specific needs of the user groups; meet with the vendors to select the best options and pricing; advise the owner on the most logical options; plan and build the spaces to accommodate the function of the project; coordinate purchases and timelines; install the infrastructure; facilitate training of staff to use the equipment; and outline care and maintenance. In addition to being responsible for

1720-529: The tunnel from 1993 to 2023 under a build-operate-transfer (BOT) on a 30-year franchise contract with the Hong Kong government . The tunnel is the first three-lane road tunnel in Asia to be constructed using submerged pipe. It was built as part of the Airport Core Programme , which included other infrastructure projects to support the Hong Kong International Airport at Chek Lap Kok . The tunnel carries on

1763-661: The tunnel project would be financed as a private venture, with bidding initially scheduled to be called in April 1991. As the project was to span the change in sovereignty of Hong Kong, the support of both the British and Chinese was necessary. In September 1991, the British and Chinese governments signed the Memorandum of Understanding committing their firm support for building the new airport at Chek Lap Kok and its connecting infrastructure. Since mid-1991, private sector companies interested in

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1806-543: The tunnel, reduced the prices for private cars and taxi. Western Harbour Tunnel has been a place for many events. Before the Western Harbour Tunnel is officially open to public, in 1997, Walk for Millions was held in Western Harbour Tunnel. Participants can participate in the walk by soliciting donation from friends and relatives. Standard Chartered Hong Kong Marathon is a sport event which held in Western Harbour Tunnel since 1999. Western Harbour Tunnel Company

1849-508: Was $ 30. The franchisee traffic forecast in January 1997 made before the tunnel opened was between 50,000 and 70,000 vehicle trips daily during the first year of operation. The actual number of daily trips did not exceed 47,000 and averaged at 20,000. The Government and the consortium agreed on the toll and its future adjustment where the starting toll for private cars was proposed to be at HK$ 30. The agreed automatic adjustment mechanism would allow

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