Lawmakers query legality of second high speed rail loan

Legislators yesterday questioned the legality of the cash-thirsty Taiwan High Speed Rail Corp's (THSRC, 台灣高鐵) second syndicated loan application, citing insufficient collateral.

As the introduction of high-speed railway services, originally scheduled for last October, was postponed by one year, THSRC has applied for a syndicated loan of NT$65.5 billion (US$2 billion) to make up the capital gap.

One of the forms of collateral it has offered is the superficies rights to its train stations.

Chinese Nationalist Party (KMT) Legislator Fei Hung-tai (費鴻泰) questioned the real value of the collateral, saying that the Hsinchu and Taichung stations had not been completed and that the THSRC had only paid a deposit for the Chiayi station.

Mckinney Tsai (蔡友才), acting chairman of the International Commercial Bank of China (ICBC, 中國國際商銀), one of the providers for the THSRC's initial NT$323.3 billion syndicated loan, said the bank had not yet commenced negotiations with the company on a further loan and would investigate the matter fully before injecting further capital.

In response, Arthur Chiang (江金山), vice president of THSRC's administration division, said the collateral provided by the company was "concrete."

"We are still negotiating with our lenders regarding the loans, and hope to achieve an agreeable result," Chiang said in a phone interview yesterday.

Construction work on the high-speed rail system was 94.05 percent complete as of the end of February, Wu Fu-hsiang (吳福祥), director-general of the government's high speed rail bureau, said on Wednesday.

The rail service was originally scheduled to begin operating on Oct. 31 last year.