Lawmakers serving on the legislature’s Transportation Committee yesterday passed a resolution requiring that ticket prices for the high-speed rail be frozen, and warned they would refuse to review the Ministry of Transportation and Communications’ budget proposals if Taiwan High Speed Rail Corp (THSRC) insisted on raising prices as planned.
THSRC chairman Ou Chin-der (歐晉德) said the decision to raise prices had been approved by the company’s board of directors, and was to take effect on Tuesday.
The company cannot disobey the Company Act’s (公司法) regulations by accepting the committee’s resolution, he said.
The committee had postponed its scheduled Monday meeting to review THSRC’s price hike plan until yesterday because Ou was not present. The committee members also held Ou in contempt of the legislature and asked that he be replaced.
In his presentation to the committee, Ou first bowed and apologized for the inconvenience to the legislature caused by his recent overseas trip. He reiterated that raising prices is the only way to ensure that the high-speed rail’s finances are sustainable.
“Nobody likes to pay more for the high-speed rail tickets, including me,” Ou said. “However, I must make sure that the high-speed rail can continue to operate. You know our electricity costs will increase by NT$400 million [US$13.56 million] this year. Our royalties to the government will also increase by NT$1.6 billion. If we are not allowed to extend the concession we have on the high-speed rail, we will soon face a much bigger crisis based on the current rate of depreciation.”
Although the company has made a profit in the past three years, it still had accumulated losses totaling about NT$60 billion, he said.
The company had borrowed about NT$500 billion to build the rail system, which it must recoup within its 35-year concession period, he said.
Democratic Progressive Party (DPP) Legislator Lee Kun-tse (李昆澤) said THSRC is a state-run corporation disguised as a private firm. Its price hike would be like torrential rain that causes mudflows that destroy people’s lives, he said.
Lee said the company should try to increase its passenger volume and offer more discounts for off-peak-hour trains before resorting to raising ticket prices.
Chinese Nationalist Party (KMT) Legislator Lin Kuo-cheng (林國正) said that THSRC was only able to relieve its financial burden through the government’s assistance.
The interest on THSRC’s loans has dropped from NT$17.5 billion to NT$8.7 billion, while annual depreciation has fallen from NT$20 billion to NT$11 billion, Lin said.
Given that the company was able to turn a substantial profit in the past three years and the nation is suffering from a weak economy, the company should not raise prices, Lin said.
DPP Legislator Tsai Chi-chang (蔡其昌) said THSRC’s proposal to extend its concession period was not the only way to solve its financial problems, and the ministry should consider ticket prices as well.
“If the company decides to raise ticket prices, it should not be allowed to extend the concession period,” he said.