The toll fees for the Machang Bridge, a 1.7-kilometer-long marine bridge connecting Gapo-dong in Masanhappo-gu and Gwisandong in Seongsan-gu, Changwon, Gyeongnam Province, will be further discounted during commuting hours.
On September 15, Gyeongnam Province held a briefing at the provincial government press center and announced that it would use the financial savings from winning an international arbitration case regarding financial subsidies with Machang Bridge, the management and operating company, to reduce toll fees on the Machang Bridge.
Gyeongnam Province Governor Park Wansu is announcing plans to further reduce toll fees during commuting hours on the Machang Bridge. Photo by Lee Seryeong
Starting October 1, toll fees on the Machang Bridge will be discounted by up to 32% during commuting hours-specifically, from 7:00 a.m. to 9:00 a.m. and from 5:00 p.m. to 7:00 p.m.
This is an additional 12% discount on top of the 20% discount that was implemented in July of last year, when Changwon City and Gyeongnam Province jointly subsidized tolls during commuting hours.
With these discounts, toll fees will be reduced as follows: for small vehicles, from 2,500 won to 1,700 won; for medium vehicles, from 3,100 won to 2,200 won; for large vehicles, from 3,800 won to 2,700 won; and for extra-large vehicles, from 5,000 won to 3,500 won.
The Machang Bridge, managed and operated by Machang Bridge Co., Ltd., is a privately funded road that officially opened on July 1, 2008.
Macquarie Korea Infrastructure Fund (MKIF), the largest shareholder of Machang Bridge, has invested 33.8 billion won, equivalent to a 70% stake, and 79 billion won in subordinated loans, which is 50% of the total, and has been operating the bridge under a 30-year management and operation right from 2008 to 2038.
Since the launch of the 8th popularly elected administration in 2022, Gyeongnam Province and Machang Bridge have had differing opinions regarding the application and interpretation of amendments to the implementation agreement, including issues such as additional toll revenue and the criteria for dividing toll revenue.
Although both parties held negotiations, they ultimately failed to reach an agreement. On September 25, 2023, Machang Bridge filed an application for international arbitration with the ICC, claiming that Gyeongnam Province, as the supervisory authority, had failed to provide 3.4 billion won out of the 4.2 billion won in financial subsidies.
The main points of contention were: ▲whether value-added tax (VAT) should be included as part of toll revenue for distribution; ▲who should receive the additional toll revenue imposed at 10 times the standard rate for unpaid tolls; and ▲whether the consumer price index used to divide toll revenue should be based on the year-end value or the annual average.
On June 18, after approximately 21 months, the Hong Kong International Chamber of Commerce (ICC) ruled in favor of Gyeongnam Province, deciding that VAT should be included in toll revenue for distribution and that Machang Bridge must pay the full amount of VAT.
The ICC also ruled that Gyeongnam Province's decision to withhold 2.2 billion won out of the 3.4 billion won in financial subsidies was justified.
However, the ICC accepted Machang Bridge's claims that additional tolls are considered penalties under the Act on the Construction and Management of Private Roads, and that the standard toll should be based on the consumer price index at the end of the previous year.
Based on the international arbitration ruling, Gyeongnam Province expects to save approximately 13.8 billion won in budget expenditures until the end of the Machang Bridge's private operation period in 2038.
In addition, 4.6 billion won of the savings will be used to provide additional discounts on commuting tolls until June 2030.
It is estimated that around 16,000 vehicles commuting daily on the Machang Bridge will benefit from this measure.
Gyeongsangnam-do Governor Park Wansu is announcing plans to further reduce toll fees during commuting hours on the Machang Bridge. Photo by Lee Seryung
Governor Park Wansu stated, "We determined that the most reasonable and ethical way to use the financial savings generated from the Machang Bridge is to return them to the residents who use the bridge." He explained, "We decided to implement additional discounts during commuting hours because 34% of the daily traffic on the Machang Bridge occurs during these times, and 80% of these users are residents of the province, meaning the benefits will primarily go to them."
He added, "This measure will be recorded as a model case in which Gyeongnam Province focused its administrative resources to benefit residents, actively identified and addressed causes of fiscal leakage, and returned the results to residents without any additional fiscal input."
Governor Park also said, "This will be an opportunity to re-examine fiscal leakage not only in private investment projects related to the province but in all fiscal investment projects." He continued, "We will continue to thoroughly check for any unjustified causes of fiscal leakage and identify areas for improvement to ensure that the benefits are fully returned to the residents."
He further stated, "We are persistently requesting the government to convert the Geoga Bridge, another privately funded road, into a highway to eliminate tolls and reduce the burden on residents. We will continue to propose measures to the central government regarding privately funded roads and strive to lessen the burden on residents."
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