Debt-ridden Taiwan high-speed rail picks new chairman

Sep 22, 2009, 15:28 GMT

Taipei - The debt-ridden Taiwan high-speed rail picked a government-backed chairman Tuesday to try to ride out its financial crisis caused by mismanagement and high interest-rate loans.

The Taiwan High Speed Rail Corp (THSRC) picked Ou Chin-der, current CEO, to replace Nita Ing as the chairman.

In a statement, the Transport Ministry said the high-speed rail was the world's largest BOT (build-operate-transfer) project, and was vital to Taiwan's transportation and to raising Taiwan's international image.

The rail's losses total 70 billion Taiwan dollars (2 billion US dollars) and its debts total 461 billion Taiwan dollars (14 billion US dollars), the statement said.

To keep the rail in operation and allow it to remain a private firm, the government is talking with a banking consortium to lower rates to cut the rail's losses.

Currently the government has no plan to take over the high-speed rail or inject funds, but press reports said the majority of Taiwanese want the government to take over the rail if all options to rescue the rail have been exhausted.

The Taiwan government holds a 37-per-cent stake in the THSRC and controls four seats in the 15-member board.

The 345-kilometre high-speed rail, built with Japanese technology, began running between Taipei and Kaohsiung in 2007, with a maximum speed of 350 kilometres per hour. It was Asia's second high-speed rail after that in Japan.

But the operator has been mired in debt due to high interest on its bank loans, depreciation in the value of its assets, mismanagement and competition from other transport.