Following two major setbacks at the Legislative Yuan, the Ministry of Transportation and Communications (MOTC) yesterday secured legislators’ approval for a new Taiwan High Speed Rail Corp (THSRC) financial restructuring plan, after promising to raise funds only from state-run or state-affiliated agencies and to lower high-speed rail fares to the levels seen prior to a 2013 price increase.
THSRC chairman Victor Liu (劉維琪) said that there are still legal procedures the company must complete after the plan was approved by the legislature’s Transportation Committee yesterday, including having the plan approved at meeting of its board of directors at the end of this month and at a shareholders’ meeting in August.
The company must also revise its contract with the ministry and its creditor banks, as well as redeem its preferred stocks, which should all be completed by August, he said.
Photo: Chu Pei-hsiung, Taipei Times
As three new high-speed rail stations are to be opened on Dec. 1, Liu said the company plans to issue a new timetable in October.
Ticket prices should be cut before the Lunar New Year holiday next year, he said, adding that the company could expedite the procedure so that the new pricing regime could take effect earlier.
Currently, a one-way high-speed rail ticket from Taipei to Kaohsiung costs NT$1,630 (US$53.18). The new financial restructuring plan would lower the fare to NT$1,490, the price before an increase in October 2013.
The ministry began proposing the restructuring plan to salvage the high-speed rail operator from imminent bankruptcy in November last year. Based on the plan previously proposed by the ministry, the company would buy back NT$39.2 billion of preferred stock, reduce its capital by NT$39.1 billion to erase its debts, while later increasing its capital by NT$30 billion. Its concession period would be extended by 40 years.
To raise NT$30 billion, the firm planned to first raise NT$20 billion from state-run or state-affiliated agencies, shareholders and THSRC employees, before later seeking to raise NT$10 billion from the general public.
Democratic Progressive Party (DPP) and Chinese Nationalist Party (KMT) lawmakers rejected the plan in January, after allegations that it would benefit certain private corporations.
Both former MOTC minister Yeh Kuang-shih (葉匡時) and former THSRC chairman Tony Fan (范志強) resigned as a result, saying they had failed to defend the plan in the legislature.
The company then proposed a new plan after Liu took office in February. Unlike the previous plan, the new proposal hopes to raise NT$19.2 billion from a public share offer, with the remaining NT$10.8 billion being raised from government-affiliated institutions and THSRC employees.
The concession period was to be extended by 35 years, rather than 40.
However, the modified plan was also rejected by lawmakers without even making it to the Legislative Yuan — as some legislators indicated in meetings with the company’s executives that public fund-raising would allow Chinese investors to purchase shares of the high-speed rail system, fueling national security concerns.
To win legislative approval, the ministry proposed two options to raise the same amount of money. The first plan would allow state-run agencies to increase their investments in the firm by NT$18 billion. THSRC employees would be able to invest NT$1.2 billion and the public could buy shares valued at a total of NT$10.8 billion.
The second plan would only raise funds from state-run and state-affiliated agencies.
Prior to yesterday’s review, the ministry said that it preferred the second plan, which would increase the stake held by the government from 24.2 percent to 63.9 percent. The second fund-raising plan was also supported by a majority of lawmakers on the committee, who then became key in obtaining legislative approval for the new financial restructuring plan.
Despite the nearly overwhelming support, the plan still met with minor objections from some lawmakers.
DPP Legislator Yeh Yi-jin (葉宜津) opposed to the idea of giving THSRC another 35 years to operate in exchange for lower ticket prices, saying that the extension of the concession period was equivalent to using the resources of the entire nation to sustain THSRC at the expense of the interests of the next generation.
DPP Legislator Kuan Bi-ling (管碧玲) said that the company should maintain its financial stability in the concession period by keeping the stake held by government-affiliated institutions at 63.9 percent.
She also suggested that any change in ticket prices be sent to the Legislative Yuan for review, adding that the government should review the company’s financial situation every 15 years.
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