THSR calls on gov't to extend concession period
By Joy Lee ,The China Post
December 27, 2013, 12:09 am TWN
TAIPEI, Taiwan -- Taiwan High Speed Rail (THSR) Chairman Ou Chin-der (歐晉德) yesterday said that if the government extended the concession period, ticket prices could be decreased by over 10 percent.
Ou said that he sincerely hoped the government will understand the importance of this request so the public can enjoy reasonable ticket prices.
According to the build-operate-transfer (BOT) project contract between the government and THSR, the concession period for THSR is 35 years, which means THRS's right to operate will be transferred to the government in 2033.
THSR submitted a proposal to the Transportation Ministry earlier this year, hoping to extend the concession period from 35 years to 99 years, but the ministry has not yet approved the change.
“It has been almost seven years since the launch of THSR, and about 35 percent of the estimated cost is to allow for depreciation,” said Ou.
“However, the THSR's equipment can be used for about 70 to 80 years,” said Ou. “And by the time the concession period is over, the equipment will only have been used for 26 years, which means passengers have to pay more for tickets because the cost of depreciation will have to be paid off within the 35 years of the concession period.”
“Except for the fact that passengers have to be responsible for a higher depreciation cost, THSR also has to be responsible for NT$100 million in tickets for elders and passengers who are physically challenged, which should be the government's responsibility since it is part of the cost of social welfare,” said Ou.
According to Ou, the construction cost for THSR was about NT$500 billion along with an extra “feedback fund,” a mechanism designed to help the Transportation Ministry face the depreciation cost issue and help improve the operation of THSR in order to allow people to enjoy more reasonable prices.
Transportation Minister Says No
Transportation Minister Yeh Kuang-shih (葉匡時) yesterday said that THSR should consider decreasing the feedback fund first before demanding to have the concession period extended.
Yeh said that THSR's financial structure is not complete, so the firm has to decrease the fund before raising the issue again, or else their plea to extend the concession period might be considered simply an action to benefit the firm's shareholders.
Yeh urged Ou to discuss the issue with THSR's shareholders before requesting an extension of the firm's concession period again.