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September 26, 2017

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MOTC announces possible THSR ticket price cut

TAIPEI, Taiwan -- Transportation Minister Yeh Kuang-shih (葉匡時) yesterday announced that the Taiwan High Speed Rail (THSR) will be scheduling a capital reduction period followed by a capital increase and a prolonged concession period.

The minister made the remarks during an interpellation at the Legislative Yuan yesterday.

According to Yeh, the slated capital reduction is set at 60 percent of the THSR's currently owned funds; there will be a capital increase of NT$30 billion afterward and the Ministry of Transportation and Communications (MOTC) will be extending the original concession period of 35 years to 65 to 75 years. "There may be a ticket pricing cut as well," said Yeh in regard to the scheduled changes.

As of December 2013, the THSR owns a capital of NT$500.6 billion and a debt of NT$4.575 billion; the total deficit is NT$52.2 billion.

Former THSR Chairman Ou Chin-der (歐晉德) had previously appealed to the MOTC to extend the concession period, saying that the extension may result in a ticket price decrease by 10 percent, but Yeh denied the request because the act may profit the company's original shareholders.

An MOTC financial report stated that the THSR has to depreciate and amortize around NT$23.2 billion each year and also issue a loan principle payment of NT19.2 billion annually. Additional expenses include constructing new stations and purchasing new trains and other facilities.

The report also estimates that the THSR will need to increase its profits from around NT$40 billion to NT$57 billion in the next four years to pay off its debts, the company's income will not be able to cover its expenses for another five years when the current annual income is a mere NT$36.1 billion and the growth rate comes in at only 6.2 percent.

The THSR's new financial plan will kick off around the end of this year, said Yeh. The NT$30-billion capital increase will be able to call back the preferred stocks; the five original shareholders are unlikely to call for capital increases in the future.

Once government shareholders and half-government shareholders become the largest stock holders and consequently take control of the company, the THSR will be granted another 35-year concession period; the ticket pricing will be recalculated and perhaps altered as well, said Yeh.

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