Kaohsiung Metro may follow Taiwan High Speed Rail
The China Post news staff Friday, September 25, 2009, 9:35 am TWN
KAOHSIUNG, Taiwan -- The Kaohsiung Metro, which opened service on March 9 last year, may soon follow in the footsteps of the Taiwan High Speed Railroad's bullet train system.
Both are BOT (build-operate-transfer) projects, albeit Kaohsiung Metro is much smaller in scale.
Chuang Chi-wang, speaker of the Kaohsiung city council, said that the mass rapid transit system in the southern Taiwan special municipality is going under.
Chuang said on Wednesday that Mayor of Kaohsiung Chen Chu must get ready to take over the ailing Metro service by the end of this year.
By then, Chuang said, the MRT system in Kaohsiung will lose 60 percent of its paid-in capital or NT$6 billion. It's capitalized at NT$10 billion.
It is losing NT$250 million a month now and partners in the BOT are averse to putting in anymore money for investment. It is unlikely to get a consortium of banks to extend soft loans.
Liu San-chi, Kaohsiung Metro board chairman and chief executive officer, said yesterday the situation might not be that bad, if the municipal government would made "some money" available now.
That "some money" is believed to be between NT$3 billion and NT$4 billion.
"If that much is available," Liu said, "we would be able to persuade our institutional investors to increase our capital, and our financial crisis is over, at least in the short- and medium-terms."
For a long-term solution, Liu pointed out at least NT$20 billion is needed. "With that much money, we can assure you we can run the service smoothly until 2018," he pledged.
The trouble is that the estimated usage of the Metro service was very much over-bloated. An estimated 360,000 rides was expected to be made by the public everyday. Only 100,000 trips daily are being made now.
All this sounds almost exactly like what has happened to THSR, which the government has just bailed out. As a starter, Nita Ing was fired as THSR chair and chief executive officer on Tuesday. A consortium is being urged by the government to extend at least NT$390 billion in loans to keep THSR afloat.
The Democratic Progressive Party mayor of Kaohsiung said she doesn't want to take over the Metro.
"All institutional investors have to chip in more capital to keep the Metro going," Chen Chu said. They are all government-run state enterprises, including China Steel, whose shareholdings account for more than 32 percent of the Metro stock.
"Our Metro is unlike THSR," she said. All institutional investors in the latter are private companies, including Nita Ing's Continental Engineering Corporation.
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