Taiwan High Speed Rail: Opportunities and Challenges During Transition

Taiwan High Speed Rail: Opportunities and Challenges During Transition
China Times editorial (Taipei, Taiwan, ROC)
A Translation
September 23, 2009

The Taiwan High Speed Rail Corporation (THSR) has been in business less than three years. But it is already in dire financial straits, and carrying as much as 400 billion NT in debt. The government has intervened and mediated between its five original shareholders. Yesterday it called a special board meeting and accepted Chairman Nita Ing's resignation. A special shareholders' meeting is scheduled for November 10. The board of directors will be restructured. Quasi-official publicly-owned shares represent over half the board seats. That means the government will in effect be taking over the THSR.
As the public is well aware, the Taiwan High Speed Rail system is the largest BOT (Build, Operate, Transfer) project in Taiwan's history. According to the original specifications, the winning bidder would acquire a 50-year franchise. Upon expiration, the system would be unconditionally transferred to the government. But plans are plans, and reality is reality. During the "B" stage, the Taiwan High Speed Rail system ran into trouble, and was completed with great difficulty. Less than three years into the "O" stage, it has already amassed losses amounting to two-thirds of its investment. Its prospects are dim. The five original shareholders refuse to increase their investment. Therefore the government has ordered China Steel, Taisugar, the China Aviation Development Foundation and other government-led private companies, to provide capital injections, assistance, and loan guarantees. Operating losses remain high. If the existing management team does not wash its hands of the project, if it does not unilaterally terminate its contracts, the government must clean up the mess and assume over 400 billion NT in debt. Legal disputes may arise between public and private shareholders. The Taiwan High Speed Rail system may be forced to shut down. To avoid such a lose-lose situation, the parties are undergoing mediation. The Taiwan High Speed Rail Corporation will shorten the "O" stage and initiate the "T" stage ahead of schedule. This is probably the lesser of two evils.

The Taiwan High Speed Rail Corporation franchise will be turned over to the government. This means the myth of "BOT" has been shattered. The agencies in charge of the takeover must ensure that the Taiwan High Speed Rail system continues to operate without interruption. They must improve the Taiwan High Speed Rail Corporation's financial structure, enabling it to remain in operation indefinitely. Improving its financial structure means coping with over 400 billion NT in debt. It means raising enough capital to ensure its successful daily operation. The most direct method is capital reduction, capital injection, or assumption of the losses incurred by the publicly-owned shares. Such an approach will inevitably be criticized for using public funds to service the debt for the original shareholders. In the current atmosphere it is infeasible. Therefore Minister of Transportation and Communications Mao Chi-kuo has made it clear that the government takeover of the Taiwan High Speed Rail Corporation will adhere to a "Three Noes Policy." The government "will not purchase, will not increase its investment, and will not convert its preferred shares."

In which case relieving the Taiwan High Speed Rail Corporation's financial crisis will require the government to come forward and negotiate a new set of bank loans. Given current low interest rates, the THSR can use the new loans to pay off its old debts, thereby reducing its interest payments. Another approach is to extend the life of THSR capital depreciation and amortization. The THSR has been working toward these two approaches over the past year. So why are they dead ends? Because the banks are not optimistic about the financial prospects of private sector companies operating the THSR. They are reluctant to lower lending interest rates because they fear reduced income. As for extending the life of THSR capital depreciation and amortization, the base period was originally calculated on the basis of franchise operations. Naturally, officials cannot lightly agree to extending this period. If the THSR degenerates into an outright SOE, but co-ordinates its policies with public sector banks and the Ministry of Transportation, we can expect new loans and an extension of the life of THSR depreciation and amortization. This would alleviate the financial burden on THSR.

If the THSR becomes "quasi-public," it may benefit in these two areas. But to truly solve the problem of huge debts, or even achieve a surplus, it must increase profits and reduce losses. The THSR was under severe financial constraints from its very inception. But from the point of view of "commoners," its senior executive salaries are "fat cat" salaries. The board will be restructured. Operations will begin anew. The new management team must tell us how it intends to control personnel costs.

How will it increase capacity in order to increase revenue? A fare increase is clearly necessary. In this regard, new companies actually have a better chance than old companies. The domestic customer base will develop new travel habits. The establishment of Three Links will bring tourists and businessmen. This new management team must develop these customer sources. The quality of service of course must not be compromised.

Another way to increase revenue is to develop the areas around THSR stations. The original estimates for development of the areas around THSR stations were too optimistic. Future success remains dependent upon the fate of the local economy. The ownership of the land around THSR stations must be clarified. THSR operations are not the same as land development. Will the new management team be able to cope?

The myth that the THSR project would be BOT, therefore would not need government funding, has been shattered. The government however deserves credit for intervening before the situation became untenable. The new Taiwan High Speed Rail will be both publicly and privately operated. How will it escape its predicament? That will be its severest test.

中時電子報 新聞
工商時報 　2009.09.23
社論－高鐵轉型轉運的契機與挑戰
本報訊

正式營運還不到3年的台灣高鐵，由於揹負高達4千多億元債務，經營陷入困境。經由政府出面與民間五大原始股東溝通協調，於昨天召開臨時董事會，接受董事長殷琪提出的請辭案，預計於11月10日召開股東臨時會，改組董事會，由泛官股代表掌握過半董事席位，正式代表政府「接管」高鐵。

眾所周知，台灣高鐵是我國歷來規模最大的BOT案，依照當初官方開出的規格，得標者將可取得50年的特許經營權，期限屆滿後則無條件移轉回歸給政府。但是規劃不敵現實，高鐵在「B」（興建）的階段固然是幾經波折，才勉強建造完成，而進入「O」（營運）的階段才不到3年，就已經虧損掉實收資本額的三分之二。眼見錢景無亮，五大原始股東拒絕再增資，反而迫使政府必須動員中鋼、台糖、航發會等官方主導的民間企業陸續參加認股注資，以及一再協助、擔保銀行團的聯貸。而今因為營運虧損迄未見改善，現有經營團隊如果撒手不管，或者宣告片面終止合約，則政府不但要承受高鐵所遺逾4,000億債務的爛攤子，還可能因官民之間的法律糾紛，導致高鐵營運停擺。因此為避免出現前述雙輸的局面，經由協商，高鐵公司縮短「O」的期程，提前「T」（移轉）給政府，其實應算是兩害相權下較佳的選擇了。

未來高鐵經營權的由民轉官，意謂著「BOT」神話的幻滅。接手的政府部門，除了要確保高鐵能夠不中斷地持續營運之外，當務之急則是要改善高鐵的財務結構，使其得以繼續營運下去。談到財務結構的改善，包括如何面對逾4,000億的債務，以及籌措足夠的資金使得高鐵日常營運能夠週轉得來，最直截了當的方式應該是透過減資、增資，或由政府官股認列財損。但這樣的做法，無可避免會被批評是以公帑幫原始股東償債，在當前的氛圍下並不可行。因此交通部長毛治國也明言政府介入接管高鐵，將依循「不收買、不增資、特別股不轉換」的所謂三不政策。

如是，則化解高鐵財務燃眉之急的做法，就是經由政府出面擔保，協調銀行團訂定新的聯貸案，依當前的低利率水平，讓高鐵可以借新還舊，減輕利息支出。另外一個做法，則是調整、延長高鐵資本折舊攤提年限。而前述這兩種做法，事實上也正是高鐵公司這一年來努力以赴的目標。至於為什麼走不通，關鍵在於銀行團對民營的高鐵公司營運前景不看好，以及不願因降低貸款利率而減少收入。至於延長折舊攤提年限，當初的計算基期是以特許營運年限為準，官方自然也不敢輕言同意更改延長。而今如果高鐵變質為實質公營，則以公營為主的銀行團和交通部配合政策，自然可望通過新聯貸案，以及延長折舊攤提年限，對減輕高鐵的財務負擔，自然有所裨益。

高鐵轉型為「準公營」之後，固然可望獲得前述兩方面的便利，但真要徹底解決龐大債務，甚至轉虧為盈，則在營運上如何開源節流，顯然還得再加把勁。以言節流，高鐵公司雖然從成立以來財務預估就很拮据，但是公司高級主管的薪資標準從「庶民」的角度來看，卻形同是養了一群「肥貓」。未來董事會改組，營運再出發，如何合理管控人事成本，新經營團隊自然不能沒有回應。

其次在開源方面，如何提升載客量以增加營收，顯然比提高票價更值得推動。就此而言，新公司其實比舊公司有較佳的機會，包括國內客群搭乘習慣的建立與深化，更包括兩岸大三通後帶來的觀光客源與商務客源，這部分自然是新經營團隊必須努力推動開發的。而其前提則是服務的品質不能打折扣。

另外一個開源之道則是加強站區的開發。關於站區開發，當初的預估於今看來未免樂觀，未來的成敗則相當程度取決於台灣經濟的榮枯，但有待釐清的則是站區土地所有權的歸屬，以及高鐵營運與土地開發專案不同，新經營團隊是否有此能耐兼顧。

高鐵BOT政府免出資的神話的確已經幻滅，不過政府選在情勢還不是完全不可為的時候進場，仍然值得肯定。新的台灣高鐵如何官民共治，走出困境，無疑是值得期待的嚴峻考驗。