Section one of the second beltway is the only road among the 22 private pay roads that accepts ‘cash only’. (Image : The Kyunghyang Shinmun)
SEOUL, Jan.12 (Korea Bizwire) – According to an exclusive report from The KyungHyang newspaper, a Korean daily journal, Macquarie Korea Infrastructure Financing (MKIF), the Australian company managing Gwangju’s second beltway, is rejecting the local government’s offer to financially support the installation of Highpass, an electric toll system.
The route is the only toll road in Korea for which users can only make payments in cash.Traffic cards and credit cards cannot be used.
Gwangju officials revealed on January 11 that they had finalized discussions with two out of the three operators of the second beltway, but the operators of the first section, which is 100 percent owned by Macquarie, are refusing to install Highpass.
Operators of sections 3-1 and 4 agreed to install Highpass, and signed an agreement with Gwangu city officials. Operators of the two sections will start installation, and will launch Highpass services in July.
Section one of the second beltway is the only road among the 22 private pay roads that accepts ‘cash only’. An average of 41,535 cars pass through the section every day. Macquarie is claiming that it would consider the installation of Highpass if the local government pays support funds it cut in 2012 up front.
Macquarie is currently in legal proceedings with Gwangju regarding the matter. Based on the ‘Agreement to Guarantee Minimal Operating Profits’, Gwangju supported Macquarie financially when the number of cars using the road was lower than 85 percent of the numbers expected. A total of 119 billion won was paid by Gwangju to Macquarie until 2011.
Gwangju city officials commented that they stopped supporting Macquarie because the company was reaping excessive profits by intentionally shrinking the capital of the operating company, and making loan management costs at high interest rates.
Macquarie, not being able to accept the act, filed a suit against the local government and is currently waiting for the ruling of the Supreme Court.
The amount of money Gwangju suspended payment for is approximately 85 billion won, which represents the payments until 2014.
By M.H.Lee (mhlee@koreabizwire.com)
