Wed, Dec 29, 1999 page1

• Japanese win bullet train deal

  ON TRACK Taiwan's most eagerly anticipated business deal of the year has finally been clinched. A Japanese consortium will build the trains that are to be run on the high-speed railway

  • By Shirley Sun / STAFF REPORTER
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  A Japanese consortium beat its European rival to secure a contract to supply train carriages and locomotives for Taiwan's first high-speed railway system, the Taiwan High Speed Rail Corp (THSRC, 臺灣高鐵) announced yesterday.

  "The Taiwan Shinkansen Consortium (TSC, 臺灣新幹線企業聯合) and the Eurotrain both satisfy the needs of the THSRC," THSRC President George Liu said. "How-ever, the board decided that the TSC be the priority bidder based on its technology, price, finance and maintenance merits."

  The THSRC refused to reveal how much the deal was worth, but a transport ministry official confirmed that the NT$95 billion (US$3 billion) core contract would be granted to the consor-tium led by Mitsui & Co (三菱).

  "We expect to sign the final contract by the end of January," said Liu. "Otherwise, we will turn to the rival Eurotrain consortium for negotiations."

  The TSC confirmed that it would begin negotiations early next year to finalize the exact cost of the project, including export credits, loans, TSC's expected equity investment and the transfer of technology.

  According to Liu, Eurotrain uses euros when calculating its costs while the Japanese use yen. Therefore, "the prospects for exchange rate fluctuations in the yen and euro were also a consideration."

  He also pointed out that Japan's winning proposal is different from the one proposed by the consortium in 1997.

  "Before, the model [of engines and carriages] was the HOPE 500," said Liu. "Now it is the HOPE 710."

  The announcement came as a surprise to the Eurotrain consortium, which had been in partnership with the THSRC for more than two years, dating back to the time of it winning the original bid in 1997.

  "We are very disappointed," said Ambroise Cariou (卡利歐), vice president of French firm Alstom (亞斯通) and the Eurotrain consortium's spokesman. "The decision was not consistent, and we are a little bit worried in that regard."

  However, Cariou added, "We respect that decision, and we will wait. If they fail to reach a consensus [with the Japanese], we are prepared to talk to THSRC again."

  Later, however Cariou's company announced in Paris that it would look into the legal consequences of the decision.

  "Eurotrain will take all necessary actions to protect its inter-ests," it said. An Alstom spokewoman told Reuters that the matter was now in the hands of legal experts who were looking into the consequences of the decision but that it was premature to say more.

  Asked if this meant that Eurotrain would seek financial compensations, she said "everything is open."

  "Eurotrain takes note of this information and remains convinced that its offer is the premium solution for the Republic of Tai-wan," the statement also said.

  Agencies quoted local media yesterday as reporting that the Taiwan government had pushed for the Japanese consortium to be selected in order to pave the way for President Lee Teng-hui (李登輝) to visit Japan after he retires.

  Eurotrain officials would not comment on such rumors yesterday, saying only that they were worried about the safety of the Japanese project.

  "The width of the path for the train tracks should be 90 square meters [ie, the size of the area that must be cut to make a tunnel]," Cariou said. "What the Japanese team is proposing now is only 64 square meters. This was convenient in the 1960s, when the trains traveled at 220km/h. Now, the speed is 300km/h."

  Ironically, the Shinkansen system used in Japan is based on a 90 square meter track area. And the contract, if it goes all the way through, would mark the first time the Shinkansen system has been exported. The two groups are also vying for a similar contract in China, for a train system linking Beijing and Shanghai.

  It has been a tension-packed year for both groups. The THSRC started evaluation work on the line's core electrical and machinery system operations as early as December last year.

  Eurotrain had tried previously to sweeten its bid, offering to throw in significant financing and even take an equity stake in the NT$446.4 billion (US$14.2 billion) project. But momentum had been gradually shifting toward the Japanese, as competing groups of Taiwanese financiers put forward proposals that specified a preference for a particular system.
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