The Taiwan Railways Administration (TRA) said on Thursday it was considering accepting the terms of a settlement proposed by the Public Construction Commission which would allow the contractor of the EMU800 train system to use a Japanese brake system.
In 2011, the railway agency contracted state-run Taiwan Rolling Stock Co (TRSC) to build 296 EMU800 commuter train carriages, with the first batch of 16 carriages being built in Japan and the remainder being built in Taiwan.
Prior to signing the contract, the agency had listed three different brake systems that could be used in the new trains, with a German brake system topping the list, followed by the Japanese one. The contractor chose the German brake system.
However, the TRA found during an on-site inspection in Japan that the contractor had used the Japanese brake system rather than the German one, without informing the agency. The TRA asked the company to address the problem within a designated period, or it would fail a final inspection of the train carriages.
The TRSC said it might have to declare bankruptcy if it fails to deliver on the NT$15.4 billion (US$515.6 million) contract.
The dispute between the TRA and the contractor eventually went to the Public Construction Commission for arbitration, which has proposed that the two parties reach a settlement under four conditions. First, the two must establish testing and inspection procedures for the first batch of 16 train carriages. Second, since using the Japanese brake system would save the contractor about NT$99.5 million in manufacturing costs, the TRA is entitled to deduct the stated amount from their original agreement. Third, the warranty period for the brake system is extended from three to four years; and fourth, the backup supplies of air compressors are to be increased by 50 percent.
In addition to those terms, TRSC agreed to deduct NT$5 million from the contracted sum as the arbitration had saved the contractor from a potentially expensive lawsuit.
Ho Hsien-lin (何獻霖), director of the TRA’s Rolling Stock Department, said that after consulting with the agency’s lawyers, it is considering accepting the terms of the settlement.
He said that the terms would be executed following a final confirmation from the commission.
The dispute had delayed the delivery of the first 16 train carriages, which were scheduled to arrive in September last year.
Ho said the TRA would ask the contractor to speed up the delivery of the first batch.
The EMU800 commuter trains are to be used to increase the number of train services to the east coast, following electrification of the railway line between Hualien and Taitung. The new trains are also to be deployed to carry commuters between Keelung and Hsinchu, the largest commuter corridor in northern Taiwan. Some of the old trains may be retired after the addition of the new trains, Ho said.
Despite the settlement, Ho said the railway agency would still follow the contract in terms of the penalties imposed on contractor if it fails to deliver the train carriages.
The contractor will face a fine of NT$770,000 per day for each day it misses the deadline stated in the contract, Ho said, adding that it would include the time spent settling the dispute.
The agency estimated that the first batch of trains should arrive in September and the new trains could be used to carry passengers by the Lunar New Year holiday next year.