Nita Ing Dismisses Reported Gov't Takeover of High-Speed Rail

Taipei, June 4, 2009 (CENS)--Despite its staggering deficit, Nita Ing, chairperson of Taiwan High-Speed Rail Corp.(THSRC), categorically denied yesterday (June 3) the rumor concerning the takeover the high-speed rail by the government but admitted the company wouldn't be able to break even by year end, as originally scheduled.

At a shareholders' meeting of the company, Ing said that the current conditions of the company don't meet those for mandatory takeover of BOT (build-operate-transfer) projects by the government, adding that the company is making an all-out effort to slash its deficit, which had accumulated to NT$67.5 billion as of the end of 2008 and NT$69.1 billion as of the end of the first quarter this year.

The board of directors, for instance, will establish a station-area development company this week, with the aim of realizing huge profit potential from realty development in the areas surrounding high-speed rail stations.

To boost its passenger load factor, the company is planning a variety of incentive programs, including preferential-rate tickets during summer vacation and for online ticket booking.

In addition, said Ing, THSRC is talking with the banking consortium to refinance its huge loans totaling NT$373.8 billion, in order to further cut interest rates, which have dropped to the weighted average of 2.6% now, thanks to the company's strenuous effort in winning concessions from lending banks. Ing noted that the company can save over NT$3 billion in annual interest payment for every one percentage point of interest cut.

Ing, though, defended the company's extraordinarily high pays for its executives, a subject of widespread criticism, in view of its mounting deficit, saying they are necessary for retaining professional talents. Despite pay cuts ranging 10-20% this year, annual pays for the company's executives remain quite high, including over NT$10 million for the three foreign senior vice presidents each and NT$4.32 million for its board directors. Twenty two vice presidents and higher-ranking executives collect annual pay exceeding NT$2 million.

Ing attributed the company's huge deficit to three major factors: insufficient load factor, heavy interest burden, and unreasonable depreciation period. The facility, for instanced, is transporting only 87,000 passengers daily on average, a far cry from the government's original projection of 284,000 for this year. Meanwhile, outlays for interest payment and provisions for equipment depreciation has hit NT$107.9 billion so far, according to Ing.