The government has begun preparations to take over the operation of the high-speed rail system if the financial restructuring plan of the Taiwan High Speed Rail Corp (THSRC) is not approved at Legislative Yuan by the end of this month, the Bureau of High Speed Rail said yesterday.
The government would assume the debt — exceeding NT$300 billion (US$9.5 billion) — as soon as its build-operate-transfer contract with the THSRC is terminated, the bureau added.
As of June, the THSRC had assets of NT$501 billion and liabilities of NT$452.8 billion. It had accumulated losses of NT$47 billion. It is also obligated to pay dividends of NT$48.2 billion to shareholders.
The company is also expected to buy back the preferred stock valued at NT$39.2 billion next year, as the court has sided with the owners of the stock during the first trial.
Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said the THSRC could go bankrupt in March if the lawmakers fail to approve the financial restructuring plan by the end of this month.
Bureau of High Speed Rail Director-General Allen Hu (胡湘麟) said the company would violate the terms of its contract with the government if it fails to pay its debt, adding that the bureau is entitled to terminate the contract with the THSRC if it fails to address the issue within 80 days.
Hu said, if the contract between the government and the company was terminated, the government would dispatch a team to take over the company and ensure continued operations. In the meantime, the government would be obligated to pay back the loans of NT$308.3 billion that the THSRC borrowed from banks, he said.
“We would spend an additional NT$150 million assessing the value of the remaining assets, which is estimated to take two months to complete,” Hu said. “Our rough estimate was that we need about NT$390 billion to buy back the system.”
Hu said if the government bought back the system it would first need to determine if it would outsource the operation to another private company or it would set up a state-run firm to operate the high-speed rail system.
The processing time for either option would likely take at least one year, Hu said, adding that the government would have to find ways to accommodate employees after the buyback.
It would also need to settle a lawsuit with the THSRC as the company is seeking compensation of NT$300 billion from the government, Hu said.
Commenting on lawmakers’ doubts about the company’s financial restructuring plan, Hu said ticket prices were a key factor as lawmakers do not want the plan to only benefit the shareholders.
The bureau has communicated with the THSRC on this matter and believes the company is seeking a solution, although the return on investment for future investors would be dropped from 5.9 percent to 4.2 percent, the bureau said.
If the government takes over the high-speed rail system, ticket prices would remain unchanged until it finds a new operator, the bureau said.
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