Taiwan High Speed Rail Corp (THSRC) yesterday said that it is seeking to extend its exclusive operating rights to 99 years as a solution to its financial problems.
The company is scheduled to hold its regular shareholders meeting today.
The high speed rail system was built under a build-operate-transfer (BOT) contract, under which THSRC received exclusive rights to operate the system for 35 years. It came into effect on July 23, 1998.
The company’s financial crisis emerged two years after the high-speed rail officially began operations in 2007, when its accumulated financial losses topped NT$72 billion (US$2.4 billion at current exchange rates). The crisis eased after loans worth about NT$380 billion were secured following government intervention in 2010.
Though the company managed to turn a profit two years ago, it still has an accumulated deficit of approximately NT$60 billion.
The Bureau of High Speed Rail, which represents the government in overseeing THSRC operations, confirmed that the company had proposed a plan to improve its financial situation. According to the bureau, the company said that it failed to meet its estimated passenger volume and revenue because of a number of factors, including the 921 Earthquake in 1999, the financial burden of subsidizing tickets for the handicapped, senior citizens and children, as well as the global financial downturn.
The company held that the 1999 earthquake was a natural disaster it had no way to prevent, and that subsidized tickets should be funded by the government’s budget for social welfare programs. The global financial downturn hit passenger volumes, the company said.
Aside from allowing the company exclusive rights to operate the high speed rail system for 99 years, the bureau said THSRC also proposed that the government, among other measures, assist it in securing loans and reduce interest rates.
“Based on the terms of the contract, all the non-force majeure reasons will be evaluated and determined by the members of the high-speed rail coordination committee. The Ministry of Transportation and Communications is handling this matter based on the terms of the contract,” the bureau said in a statement.
The bureau also said that the THSRC plan lacks financial analyses to back up its claims, as well as specific steps for implementation. Some of the company’s proposals may involve changes in contract terms, the bureau added.
The bureau said that it has asked the company to provide additional information and help clarify some of the details in the plan.