The transfer of 15 taxi licenses was finally approved by the local government in south China's Shenzhen City on Monday, marking the first private sale of taxi licenses in the city, the Shenzhen Special Zone Daily reported.

Each of the licenses was traded for 400,000 yuan (US$48,000) from a local transport company to a Hong Kong resident.

The price was much lower than the expected market price of between 800,000 yuan and 900,000 yuan, as the two sides already had previous agreements, the report said.

Shenzhen took the lead in the nation in auctioning 140 taxi licenses in 1988 at a price of 198,000 yuan each.

The city held three more auctions in 1991, 1992 and 1993. The price rose with the city’s rapid economic development and expanding population in the following years. The number of legal taxi licenses has remained at 8,508 since 1996, while the city’s population has doubled.

Until the sale, individuals were not allowed to own taxi licenses. However, licenses changed hands for as much as 800,000 yuan on the highly lucrative black market and the government changed its policy to clamp down on it.

The licenses have been blamed for Shenzhen’s high taxi fares. The flag fall is 12.5 yuan, which covers the first three kilometers, the highest on the Chinese mainland. It is 10 yuan in Beijing and seven yuan in Guangzhou.

The city held a public hearing to cut taxi fares in September. But no solution has been reached yet as the license holders refused to lower the fees they charged taxi drivers.

The legal transaction would help to regulate the market, the report said.

The Hong Kong license holder has entrusted the seller, Zhongludahua transport company, to operate his licenses and taxis. Only registered companies approved by the government are allowed to take charge of taxi operations.

(Shenzhen Daily December 15, 2004)