Sat, Aug 12, 2006 - Page 12 News List

Pundits say Far Eastern decision not necessary

By Jackie Lin  /  STAFF REPORTER

Far Eastern Group's (遠東集團) unexpected announcement yesterday that it plans to give away its shareholding in the freeway electronic toll collection (ETC) operations to the government was described by pundits as an unnecessary move that only complicates the already thorny matter.

In a surprising press briefing yesterday morning, the group said it will transfer its 55 percent stake in Far Eastern Electronic Toll Collection Co (遠通電收) to the government for free and allow the government to run the joint venture with three other private shareholders -- Teco Electric & Machinery Co (東元電機), Systex Corp (精業) and Mitac Inc (神通).

"The government should not and need not accept its offer" as the two sides have no obligations toward each other and are not bound by the contract following the court ruling last week, said Chen Dun-ji (陳敦基), professor of transportation management and dean of the college of management at Tamkang University, during a phone interview.

Far Eastern Group's announcement yesterday added a dramatic twist to the nation's freeway ETC situation, which appeared to have caught the government off guard after the Minister of Transportation and Communications Kuo Yao-chi (郭瑤琪) tendered her resignation earlier this week.

Both the group's announcement and Kuo's resignation came after the Administrative Supreme Court last week ruled that the Taiwan Area National Freeway Bureau violated principles of fairness and public welfare when choosing the best build-operate-transfer (BOT) partner for the nation's first ETC project.

This means everything is back to square one and it needs to hold a second selection round to choose the best candidate.

The court's ruling also calls into question whether Far Eastern Electronic's equipment and facilities are standard and legal, Chen said.

While the Far Eastern Group's strategy is meant to turn around the public's negative impression, Chen said he felt this method is tantamount to "kidnapping the people" as the government would be forced to use Far Eastern's system, allowing the company more bargaining leverage in future negotiations.

Jessy Wu (吳政勳), deputy chief of the BOT research center at the Taiwan Institute of Economic Research (TIER, 台經院), urged the two sides to exercise restraint and honor legal requirements.

The most urgent issue now is for the Taiwan Area National Freeway Bureau to convene the selection committee, Wu said.

If the committee members still decide that Far Eastern Electronic is the best candidate, variables for the ETC project will be reduced although controversy might continue to grow.

If Far Eastern Electronic loses the bidding this time, the government would have to negotiate compensation in accordance with the terms stipulated in the contract.

However, if the government fails to convene the committee as most of the members have expressed limited interest, it might have to annul the bidding.

By that time, accepting Far Eastern Group's share donations could be listed as one of the options, he said.

Nevertheless, with few cards to play, the government must follow the law to pick up the pieces, or risk losing its credibility, both pundits said.

According to Far Eastern Electronic, nearly 220,000 motorists have installed on-board units since its operations started in February. The firm estimated the ETC program could save motorists up to NT$6.4 billion (US$195 million) in gasoline expenditure per annum.

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