(Yicai) Aug. 11 -- The chairman of the tram operator in Honghe prefecture in China’s southwestern Yunnan province said a rumored service stoppage is untrue, but added that services are under intense pressure due to a more than CNY80 million (USD11 million) a year shortfall in funding.

Local tram services are operating normally, Yunnan Honghe Modern Tram’s Pu Yufei told Yicai after online rumors said a serious imbalance between income and expenditure meant the firm planned to suspend services in Honghe yesterday. As trams in many other places have been suspended, the rumors attracted widespread attention.

In October 2020, the tram line of the demonstration section from Mengzi Bus Terminal to Honghe Comprehensive Protection Area (Mengzi North) in Honghe went into service, with a total length of 13.4 kilometers.

The line is one of four in the 66.8-kms demonstration project for Yunna’s central city cluster, with an estimated total investment of about CNY7.23 billion (USD1 billion), of which the section opened in October 2020 projected at about CNY1.57 billion. Apart from the completed sections, there is also a branch under construction.

The project’s passenger flow last year was about 314,000, with revenue from tickets of  CNY1.075 million (USD148,887.5) and operating costs of CNY84.09 million (USD11.65 million), according to the website of the Mengzi municipal transportation bureau. That means that regardless of financial subsidies and other income, the project has a funding gap of as much as CNY83 million a year.

Concerns have been raised about whether huge subsidies for trams can be sustained. In recent years, due to the lack of passenger flow and other reasons, trams in Zhuhai and some other places in China have been suspended.

Many tram services in the country are built in relatively remote places, with few passengers, Cai Shaoqu, an expert in the transport ministry’s bus priority experts database, told Yicai. Excluding construction funds, the operating cost of 1 kilometer alone is CNY2 million to CNY3 million, he said.

For areas planning to build trams, Cai said construction should first consider guaranteeing passenger volumes, and trams should be built on corridors with many passengers, to ensure financial sustainability and reduce the pressure of government subsidies in the later operation.

Editor: Peter Thomas