Shenzhen Metro was considering an increase in fares with the company predicting a loss of 22 billion RMB (3.25 billion USD) between 2012 and 2016 as a result of the huge investment and low-priced tickets, the company said Monday (July 19).
Based on the Metro's huge investment, interest and depreciation, ticket prices should average nearly 6 RMB, but the existing average ticket price was 2.8 RMB far below the level needed to offset losses, said Huang Rui, chairman of Shenzhen Metro Co. Huang made the comments Monday during a tour by the Standing Committee of the Shenzhen Municipal People's Congress (MPC).
Huang proposed that an elastic pricing system be established to reduce the Metro's losses. Huang said a loss of 22 billion yuan would exert great pressure on the city's finances, the Shenzhen Evening News reported.
But an immediate price jump to 5.9 yuan would not be accepted by residents, said Xiao Youmei, a deputy to the MPC."The Metro company should focus on reducing costs," he said.
Shenzhen Metro also lacked financial and policy support from the municipal government and preferential policies for interest, depreciation, tax and electricity costs would help reduce losses, Huang said.
Huang suggested a further two ways to offset losses: To build more real estate above Metro lines, or allocate more land to the company to develop real estate.
Chen Biao, vice director of the Standing Committee of the Shenzhen MPC, said existing Metro fares were based on 23 kilometers of lines and passenger numbers. Once the lines were extended, the average costs would be brought down, he said.
"This will be taken into account when pricing policies are adjusted in the future," Chen said.
(By Jane Lai)
