BEIJING — China on July 12 issued a guideline allowing local governments to issue special bonds to support the construction of toll roads.
Provincial-level governments can sell such bonds within the central government’s approved annual quotas, according to the guideline jointly issued by the ministries of finance and transport.
Funding from the bond issuance must be used to build government-operated toll roads, prioritizing national-level road projects and these under the Belt and Road Initiative, Beijing-Tianjin-Hebei coordinated development and Yangtze River Economic Belt plans.
Local governments should use road tolls as well as incomes from roadside advertising, service stations, and road interest transfer to pay the debts.
The bonds, with higher credit ratings, longer maturing terms and lower financing costs, should become a major channel to finance government-operated toll road building, the Ministry of Finance said on July 12 in a separate statement.
The move aims to support the country’s road network expansion while controlling local government debt risk in the transport sector, it said.
China’s toll roads reached 171,100 kilometers at the end of 2016, accounting for 3.6 percent of its total road network, according to official data.
Toll roads have stacked up a debt pile of 4.86 trillion yuan (about $716 billion) at the end of 2016, with more than 80 percent of their annual income last year going to pay down debt and interests.