TAIPEI: The government will do its best to maintain the smooth operation of Taiwan's high-speed rail system, but the company responsible for the line will retain control of day-to-day operations, government officials said yesterday.

"Presidential Office" spokesman Wang Yu-chi said that senior officials had discussed the struggling railway system at a recent regular meeting amid reports that the government will take over the debt-ridden Taiwan High Speed Rail Corp (THSRC).

THSRC's financial woes grew more precarious recently after the company's original shareholders expressed reluctance to pump any more money into the money-losing company, an attitude that has prompted creditor banks to refuse to offer any new loans to help ease the company's financial crunch.

THSRC, a private company that built the 345-kilometer railway, has operated the line under a build-operate-transfer (BOT) contract with the government.

"Premier" Wu Den-yih was quoted as having said in the meeting that the high-speed rail system, which shortens travel between Taipei in the north and Kaohsiung in the south to 90 minutes, should never be allowed to fall through and should keep running normally.

All other officials present at the meeting, including Taiwan leader Ma Ying-jeou, agreed to Wu's view and they unanimously agreed that the government should keep the system running smoothly in a responsible manner, Wang said.

Earlier in the day, "premier" Wu paid a visit to the Legisaltive Yuan to brief lawmakers from across the party spectrum on the government's stance on the high-speed railway's fate.

"The government's stance is clear that the rail system should remain operational," Wu told lawmakers.

In the face of this awkward situation, Wu said, the government still has to figure out a way to maintain the rail system's normal operations and financial viability.

He reiterated the government's stance of "no takeover and no increase of its investment in the company".

Instead, Wu said, the government will play a leading role in charting the company's operational direction to improve its financial status.

Wu said THSRC's monthly revenues exceed its operating costs, so it runs a small operating profit.

"But the surplus has been more than offset by its heavy burden of interest payments, depreciation and amortization," Wu said.

According to Wu, the government's involvement in a supervisory role could help persuade creditor banks to offer new loans at lower interest rates to keep the company afloat.

"That is the first step in resolving the THSRC's financial woes and the next step will be improving its depreciation and amortization issues," Wu said.

The government and several government-owned companies and organizations have stakes in the company, and Wu said the government has an interest in seeing the high-speed rail system operate smoothly with sound financing.

Earlier in the day, head of Transportation and Communications Mao Chih-kuo rebutted media descriptions of government involvement in THSRC operations as an indication that Taiwan's biggest BOT project had failed.

Mao stressed that the government has no plan to take over the company.

"The government and THSRC will remain partners as the BOT's basic principle lies in a partnership between the private operator and the government," Mao explained.

He said the THSRC will remain the rail system's operating body and that the spirit of the BOT contract between the two parties will remain intact.

China Daily/CNA

(HK Edition 09/22/2009 page2)