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Updated Tuesday, September 22, 2009 9:19 am TWN, The China Post news staff and CNA

Gov't to run high speed rail without taking over THSRC

Mao Chi-kuo, minister of transportation and communications, explains the bailout of the ailing Taiwan High Speed Rail Corporation yesterday. He told a press conference THSR will ...

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Gov't to run high speed rail without taking over THSRC

THSRC's financial woes grew more precarious recently after the company's original shareholders expressed reluctance to pump any more money into the money-losing company, an attitude that has prompted creditor banks to refuse to offer any new loans to help ease the company's financial crunch.

For his part, Minister of Transportation and Communications Mao rebutted media allegations of government's deeper involvement in THSRC operations as an indication that the country's biggest BOT project had failed.

Mao stressed that the government has no plans to take over the company, saying it only intended to get a majority of seats on the company's board of directors in accordance with the Company Act so that it can play a leading role in steering the company's future course on the right track.

"The government and THSRC will remain partners as the BOT's basic principle lies in a partnership between the private operator and the government," Mao explained.

He said the THSRC will remain the rail system's operating body and that the spirit as well as the guidelines of the BOT contract between the two parties will remain intact.

The high-speed rail company is scheduled to convene an extraordinary board meeting today to set a date for an extraordinary shareholders' meeting.

Corporate sources said that the meeting agenda does not list any personnel change proposals. But other sources said that THSRC chairwoman Nita Ing is expected to offer her resignation at the meeting.

If Ing resigns, the sources said, the government may arrange for THSRC chief executive officer Ou Chin-der to first gain a seat on the board and then have him elected as new board chairman.

Ou, a former deputy mayor of Taipei who is widely believed to be one of President Ma's trusted friends, is not a board member at the moment.

Of the 14 seats on the THSRC board, two are held by independent directors and four are filled by representatives of fully or partially government-controlled organizations -- Taiwan Sugar Corp., the CTCI Foundation, the China Aviation Development Foundation and China Steel Corp.

THSRC has paid-in capital of NT$105.3 billion but its accumulated losses had reached NT$70.2 billion as of the end of June this year, or about two-thirds of its capital.

The company informed the Ministry of Transportation and Communications (MOTC) of its financial woes in February. After discussions with the Executive Yuan, the MOTC agreed to assist the company in resolving its financial difficulties by seeking new bank loans.

However, creditor banks were reluctant to approve new loans unless the THSRC's five original shareholders inject more capital.

According to the reports, if Ou replaces Ing as the company's new chairman, the government will endorse the new loans.

Citing unidentified banking sources, the reports said that after Ing held discussions with creditor banks, she has agreed to resign and let the government take a leading role in running the company.

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