High speed rail extension cost affordable: DGBAS chief
Taipei, Oct. 7 (CNA) The estimated NT$55.4 billion (US$1.79 billion) cost of extending the high-speed rail line from its current southern terminus in Kaohsiung to Pingtung County is affordable, the head of the Directorate General of Budget, Accounting and Statistics (DGBAS) said Monday.
Chu Tzer-ming (朱澤民) was responding to questions from lawmakers during a hearing of the Legislative Yuan Finance Committee that was attended by officials in finance, national development and transportation, as well as Taiwan High Speed Rail Corp. (THSRC) Chairman Chiang Yao-chung (江耀宗).
They were invited by the committee to report on the much-debated extension project announced by Premier Su Tseng-chang (蘇貞昌) last month.
Critics have branded the project a waste of money and a ploy by the ruling Democratic Progressive Party (DPP) to attract votes in the presidential and legislative elections set for January 2020.
The Ministry of Transportation and Communications has estimated that building a 17.5-kilometer extension line from the high speed rail's Zuoying Station to Liukuaicuo Station on the Taiwan Railways Administration (TRA) Pingtung line, which is one stop west of the TRA's Pingtung Station, will cost at least NT$55.4 billion, not including the cost of purchasing rolling stock.
Based on a 30-year operational period, the project will have a revenue-to-cost ratio of 0.961, and the net proceeds from the project will fall short of the total investment in the project by 2.1 percent, according to the ministry's report on the project.
Facing concerns of some lawmakers about the possible financial burden resulting from the construction project, Chu said that if setting 10 years as the repayment period, the government would only need to allocate around NT$5 billion per annum for the project, accounting for a mere 0.25 percent of the total annual national budget.
Calculating based on the NT$467 billion budget allocated for public construction projects in 2020, the sum accounts for only 1.07 percent, Chu said. "This reflects that the high speed rail southward extension project is within an affordable range."
Asked by reporters before the hearing if the 2.1 percent shortfall in covering the project's total investment from its net proceeds means the planned rail line will run at a loss and that the losses could last 30 years or more, Minister of Finance Su Jain-rong (蘇建榮) said he believed that "this will not necessarily be the case."
Although the high-speed rail system, which began to run commercially in 2007, suffered losses in its early years of operation, it is now making money, Su said, noting that the price of THSRC shares has surged from over NT$10 to more than NT$30.
"You cannot consider the case based on the current situation. Also, the high speed rail southbound extension concerns comprehensive homeland planning and the balance of regional development," he said.
In the first half of this year, THSRC posted NT$4.2 billion in net profit, or NT$0.75 in earnings per share, but the company's debt to assets rate was 84 percent as of the end of June.
THSRC was listed on the local main board Oct. 27, 2016 with an issue price of NT$15. Its shares were priced at NT$35.05 Monday, a 1.41 percent decline from the previous trading session.
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