Wed, Nov 29, 2000 - Page 1 News List

Government affirms commitment to new rail link

By Richard Dobson  /  STAFF REPORTER

The government attempted yesterday to dispel fears that the high-speed rail project linking Taipei and Kaohsiung will suffer a similar fate to the Fourth Nuclear Power Plant (核四), saying it would see through construction of the railway in accordance with the contracts signed between the companies building it.

The Taiwan High Speed Railway Corp (THSRC), which was contracted by the government to build the railway, said on Monday it would delay the signing of an agreement with the Taiwan Shinkansen Corp (台灣新幹線) to purchase the core electrical systems for the project.

Although THSRC claimed both sides simply needed more time to prepare documentation for the deal, the delay stirred media speculation that cancellation of the nuclear plant had spurred the Japanese consortium to seek a guarantee of payment from the government even if the project was axed.

The Ministry of Transportation and Communications reportedly denied the request to guarantee the NT$95 billion purchase agreement for the communication, signalling and electrical equipment as well as rolling stock on the grounds the contract was between two private enterprises.

But the Bureau of High Speed Rail yesterday offered some assurance to Shinkansen, saying: "After the agreement is signed by both companies, the government would see through scheduled completion of the project under the terms of the deal."

A bureau official dispelled speculation linking cancellation of the nuclear plant and the Japanese consortium's reservations, saying the two issues were "totally unrelated."

"The high speed railway may have been planned by the government, but as it has been carried out on a build-operate-transfer [BOT] model, [the government] handed over the project to the private sector," said the official, who requested anonymity.

Under the BOT scheme, THSRC will build the railway and operate it for 35 years, after which time control will pass to the government. The nuclear project, however, was a government project carried out by state-run Taipower whose budget is subject to legislative approval.

"The core systems purchase agreement is a deal between two private entities ... most of the money is from the private sector and the agreement will be fulfilled by both parties in accordance to that agreement," the official said.

"If the government went around guaranteeing all such projects, it would have little time to do much else," the official added.

However the government has signed an exclusive agreement with THSRC to pay up to NT$325.9 billion out of a total of NT$677 billion in the event that construction or operation of the railway is halted.

While a similar guarantee for Shinkansen looks unlikely, the reassurance that the project will be seen through to completion is the second from the new government since it axed the nuclear plant.

Earlier this month Premier Chang Chun-hsiung (張俊雄) told reporters that the nuclear plant aside, the government would work consciously to carry out all major infrastructure projects and identified the high speed railway project as one that had the "government's full support."

Edward Lin (林天送), vice president of the high speed railway corp, is expected to meet with Shinkansen executives in Japan on the sidelines of a summit on railways and discuss signing the deal.

THSRC expects that signing of the agreement with Taiwan Shinkansen, which is led by Mitsubishi Heavy Industries, will take place within one to two weeks.

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