Sun, Jun 25, 2006 - Page 2 News List

Ministry refuses to renegotiate Far Eastern contract

By Shelley Shan  /  STAFF REPORTER

The Ministry of Transportation and Communications denied a request this week from the Far Eastern Electronic Toll Collection Co to renegotiate a contract to raise the price of on-board units (OBU) used for the highway toll collection system.

The price of the OBU was originally set at NT$1,180 (US$36.9) each. In March, the company agreed to lower the price to NT$680 each and amend the contract after the MOTC threatened to terminate the business relationship if it failed to offer a solution that better catered to the interest of motorists.

The March agreement also said motorists would be able to get refunds for the purchase price of their OBUs if they bought one and managed to use it 100 times within the next two years. It also dictated that the ministry can renew the contract with Far Eastern every year.

"The deal remains unchanged," minister Kuo Yao-chi (郭瑤琪) said.

Chen Chien-yu (陳建宇), chief of the Taiwan Area National Expressway Bureau, said Far Eastern had been in touch with the ministry about its financial difficulties and hoped the government would subsidize its operation. He said, however, the deal was proposed by Far Eastern and the bureau was neither obligated nor required to amend the contract.

"Should there be any controversy about the contract," Chen said, "it will be settled by the Public Construction Commission."

Far Eastern issued a statement saying that the current price would only recoup half of the operational costs and it expects to suffer a deficit of NT$2.1 billion this year.

Of its 185,000 customers, more than 21,000 had already qualified for refunds, which would seriously affect the company's finances.

In response, MOTC Vice Minister Tsai Duei (蔡堆) said that the company should expect a build-operate-transfer project to be unprofitable during its first two or three years. It needed to have a financial plan to fund its operation during this period, he said.

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