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Updated Monday, September 21, 2009 9:21 am TWN, The China Post news staff



	A Taiwan High Speed Rail Corp. 700T series passenger train, based on Japan's Shinkansen 700 Series, operates in Shulin, Taipei County, Taiwan, January 5, 2007. (Bloomberg) Enlarge Photo

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HSR to be bailed out

TAIPEI, Taiwan -- Premier Wu Den-yih confirmed yesterday the government is dealing with the financial crisis of the Taiwan High Speed Railroad Corporation (THSRC) in such a way that the high speed rail service will continue serving the public.

While visiting a remote village in Nantou ruined by Typhoon Morakot, Premier Wu stressed the importance of the government's role in the world's biggest BOT (build-operate-transfer) project to rush people between Taipei and Kaohsiung by train in one and a half hours.

“All we have to do is to continue the service with government supervision over the THSRC's finances,” Premier Wu told accompanying reporters.

Nantou is his native county. He was its magistrate from 1981 to 1989.

Under what is essentially a bailout plan, Nita Ing will step down as THSRC chairwoman and will be succeeded by her chief executive officer Ou Chin-der, one of President Ma Ying-jeou's confidants.

Nita Ing, chairwoman of Continental Engineering Corporation, has decided to resign, Wu said. “It's up to the THSRC board of directors to accept or turn down her resignation,” he added.

Yeh Kuang-shih, deputy minister of transportation and communications, said the THSRC board will meet tomorrow to fix the date for an emergency general meeting of shareholders, where Ou's succession will be confirmed.

Regardless of what happens at the shareholders' meeting, Yeh said, the government will not increase its holdings, which account for 40 percent of the THSRC stock.

“After the reorganization, the THSRC will remain a private company,” Yeh said. It's not a transfer, he added.

According to the BOT project, the THSRC must be a private company without government capital. There are five institutional investors, including Continental Engineering, which owns a 20 percent share of the stock. The rest of the shares would be subscribed to by individual investors.

But the government had to infuse capital after construction of the high speed railroad started. The capital now totals NT$10.3 billion. A consortium of banks had to raise enough funds to finance the project, whose overall cost ballooned to close to NT$500 billion (US$12 billion).

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