The government's decision earlier this week to break a deal with Evertransit International Develop-ment Corp (長生國際開發) regarding a proposed build-operate-transfer railway connecting CKS Interna-tional Airport to Taipei City, was lauded by a pundit as a wise decision yesterday.
"If the project is not bankable, then terminate it," said Lawrence Lan (藍武王), a professor at the Institute of Traffic and Transportation of the National Chiao Tung University (交通大學).
"All BOT projects come with high risks. It's better [to terminate the failed contract] now rather than after the builder begins construction or halfway through completion," Lan added.
The Ministry of Transportation and Communications announced on Tuesday that Evertransit, the original builder of the proposed 36.9km-transit link, had failed to secure a syndicated loan of NT$55 billion from banks by the Dec. 31 deadline, as required by the ministry in the contract.
The NT$220 billion project was originally planned to begin operations in 2008, shuttling travelers between Taipei and the airport in around 35 minutes. Previously, Evertransit proposed to allocate NT$100 billion for the rail construction and another NT$120 billion for land acquisition.
But Lan said Evertransit's financial difficulties were the major dealbreaker behind the BOT project. The government had failed to foresee the problems before it awarded the project to the builder in 1998.
He also said that Evertransit's original idea of making extravagant profits out of land development along the railway is doomed to fail, especially after the local land market hit rock bottom in recent years.
"Lessons that the government should have learned from the failure is that banking on land development -- instead of transportation services -- to finance the railway, is not realistic," Lan said.
According to Wu Fu-hsiang (吳福祥), deputy director-general of the ministry's Bureau of Taiwan High Speed Rail (高鐵局), the government will officially notify BES Engineering Corp (中華工程) -- the runner-up that won the project's priority rights in 1998 -- to take over the project by this month's end.
BES will have 15 days to reply and another 45 days to draft an initial contract with the government, Wu said.
"After the failure [of the Evertransit deal], we hope our negotiations and dealings with BES will be more practical -- by stating all possible variables in written form in the project," Wu said.
The question of whether BES will take over the project, however, depends on the government's terms, a BES manager Shu Jin-yeh (徐敬業) said yesterday.
The company needs to re-evaluate the project's financial feasibility, the railway system's capacity and the availability of investors, Shu said.
"More importantly, we need to re-consult with our original Canadian transportation partner, Bombardier Inc, and see if they are still interested in the project," Shu said.
If BES decides to pass the project, the government may re-open another round of international bidding to invite all interested local or foreign contractors -- or it may go ahead with its two back-up plans to shuttle an estimated 1.5 million airport-goers per month, Wu said.
One back-up plan calls for adding an extension of 8km to the north-south Taiwan high-speed rail system, from Ching-pu station in Taoyuan County to the CKS airport, by 2006. The high-speed rail system is currently under construction and is expected to be completed in 2004.
"The extension will connect with the completed north-south railway and is the most economic plan among all other alternatives," Chiao Tung University's Lan said.
The ministry also proposed extending the existing 19.2km coal-line railway section between Linkou and Taoyuan City to the CKS Airport, so that airport-goers can take that railway system all the way from Taipei to the airport.
"Travelling time would be less than 40 minutes with both back-up plans," Wu said.
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