Tow truck companies will be required from next Wednesday to hold permits to operate on Shanghai's highways and elevated roads.

The regulation is the latest effort by the city's transportation authority to combat the extortionate charges that some towing companies foist on captive customers.

The permits aim to help drivers distinguish the good companies from the bad, said Huang Xiaoyong, a press officer with the Shanghai Municipal Transport and Port Authority.

"Only towing companies with permits will be allowed to provide services to distressed drivers on highways and elevated roads," he told the Global Times Thursday.

To obtain the permit, towing companies must own more than five trucks and are prohibited from charging drivers more than 300 yuan ($47) for the first five kilometers of service, according to a press release from the Shanghai Municipal Transport and Port Authority.

Towing company can charge no more than 10 yuan for each additional kilometer, up to 1,500 yuan total, according to regulations that took effect last August.

The permits will also help the police get in touch with accredited towing companies during emergencies, said Sun Guofu, a press officer with Shanghai's traffic police. "During the summer when temperatures are high, many vehicles break down on the highways," he said. "It is important that drivers can call a registered towing company to avoid scams."

Last year, a driver was charged 5,000 yuan to have his vehicle towed 25 kilometers after a traffic accident.

An operation manager surnamed Li from Yanmei Tow Truck Company said that the new permits may make it more difficult for some companies to compete in the city. "Some small companies do not meet the permit requirements as they do not own enough trucks," he told the Global Times. "The new price ceiling imposed last year had already made the business very difficult."