Print

Mail

wiki links

High-speed rail to get another lifeline

The troubled Taiwan High Speed Rail Corp (THSRC, 台灣高鐵) -- contractor for the nation's first bullet-train service -- may get another helping hand from the government, as a government-backed aviation foundation plans to sell 300 million of its China Airlines (華航) shares and give the proceeds to the project.

The proposed investment in THSRC was revealed by Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) during a legislative session yesterday.

Lai said that, based on his understanding, the China Aviation Development Foundation (航發會) under the Ministry of Transportation and Communications has modified a regulation that allows the foundation to invest in major national construction projects other than the aviation industry.

The foundation is the biggest shareholder in China Airlines, the nation's largest air carrier, with about 69 percent shareholding at present.

After the revision, the foundation plans to sell 300 million China Airlines shares and will use the funds raised from this share sale to invest in THSRC, according to Lai.

As shares of China Airlines closed NT$0.05 higher at NT$15.15 on the Taiwan Stock Exchange yesterday, the foundation may raise approximately NT$4.55 billion from the share sale to inject into the high-speed railway's construction.

Vice Minister of Transportation and Communications Oliver Yu (游芳來) confirmed to reporters that such a move has been mooted, but he refused to elaborate.

THSRC has been encountering difficulties in raising funds and looked for help from the government on several occasions. This has been criticized by the pubic, as the high-speed railway is a build-operate-transfer (BOT) project and should not involve government funds or taxpayers' money.

However, the government has already pumped NT$12.5 billion into the project through various state-run enterprises, including Taiwan Sugar Corp (台糖), the Bank of Taiwan (台灣銀行) and the Land Bank of Taiwan (土地銀行).

The most recent example of this was in April, when THSRC secured nearly NT$3.2 billion from China Steel Corp (中鋼), in which the government holds a controlling stake.

The situation is getting worse for the company, after THSRC chairwoman Nita Ing (殷琪) announced this month that the launch of the service, previously slated for Oct. 31, would be delayed for a year.

According to a Chinese-language newspaper report, Ing visited Premier Frank Hsieh (謝長廷) on Tuesday to ask for help and was received by Cabinet Secretary-General Cho Jung-tai (卓榮泰).

In a statement released by the Government Information Office on Wednesday night, Hsieh said that the government will study the terms of the legislature's limit on government investment in THSRC, and is considering allowing state-run enterprises to invest more in the company, if legislation allows.

Hsieh also said that the government's ultimate responsibility is to buy out the company if it fails to raise enough funds to complete construction of the railway. In that scenario, the government may need to spend NT$300 billion (US$9 billion) on the buyout, the statement said.

As Ing previously said that THSRC has raised NT$3 billion of the NT$7.5 billion needed by the end of the month to obtain loans from banks, the NT$4.55 billion to be pumped in by the foundation is bound to solve its financial crisis, according to the newspaper report.

THSRC refused to comment on the issue yesterday. Johnson Sun (孫鴻文), spokesman for China Airlines, said that the company has no knowledge of the share sale.
This story has been viewed 2361 times.