High-speed rail ticket prices could be lowered next month if Taiwan High Speed Rail Corp’s (THSRC) financial restructuring plan is approved by the legislature’s Transportation Committee next week, Minister of Transportation and Communications Yeh Kuang-shih (葉匡時) said yesterday.
The announcement was the latest move by the ministry to garner support for its proposal on solving the high-speed rail operator’s financial difficulties. Yeh has said on several occasions that the debt-ridden company could go bankrupt in March if the government does nothing about it.
Based on the financial restructuring plan presented by the Ministry of Transportation and Communications, THSRC would buy back NT$39.2 billion (US$1.23 billion) in preferred stock, reduce its capital by NT$39.1 billion and then later increase capital by NT$30 billion, while its concession period would be extended from 35 years to 75 years.
However, the ministry has been unable to secure unanimous support from lawmakers since the Transportation Committee began reviewing the plan last month, with most legislators saying the company’s shareholders — rather than the general public — would benefit from the extension of the concession period.
They also said that the company should demonstrate goodwill by lowering ticket prices.
Earlier this year, against the advice of the ministry and lawmakers, the company raised ticket prices by about 10 percent, citing an increase in operational costs.
The committee yesterday passed a resolution, proposed by Chinese Nationalist Party (KMT) lawmakers, that the government would allow THSRC to extend the concession period to 75 years after the company lowers prices to what they were before the hike.
Yeh said that the company is scheduled to hold a shareholders’ meeting in the latter half of next month after the financial restructuring plan is passed by the legislature.
He added that the lower pricing scheme could be made public after the company signs a three-way contract with the government and banks, which could also take place next month.
According to the ministry’s Bureau of High Speed Rail, the company must lower prices no later than the date on which the new concession period is scheduled to take effect.
Yeh said the ministry does not want there to be any chance of the operator going bankrupt after the financial restructuring plan is implemented because ticket prices were set unreasonably low.
“We hope the company can change back to its previous ticket prices and have communicated the idea to the THSRC many times,” Yeh said.
However, he said that the estimated return on investment for new investors would have to be lowered to about 4 percent from 5.9 percent because of reduced revenue from ticket sales, which might affect investors’ interest in the firm.
The committee has scheduled the review of the financial restructuring plan for Monday, and Yeh said that he was cautiously optimistic about securing lawmakers’ approval for the plan.
“If the plan fails to pass in the legislature, the government and the public, as well as THSRC, will all lose. We certainly hope that we do not get to that point,” Yeh said.
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