THE SIGNING of a three-way accord on August 13 appears to have salvaged the 35-year concession for the 345 km Taipei - Kaohsiung high-speed line. The agreement followed two days of talks between the Taiwan government, concessionaire THSRC and bankers' representatives.

THSRC gave notice at the end of July that it was terminating the contract, after earlier talks failed to reach agreement by the deadline (RG 8.99 p494). Transport Minister Lin Fong-chen asked for a two-week delay for negotiations.

The government has now accepted that the contract should not be automatically cancelled if THSRC does not have its NT$280bn financing package for the NT$513bn project in place by next March. Instead there will be a six-month inquiry into the financing problems; if THSRC is not at fault it will get its NT$15bn performance bond back, but it would not be able to claim compensation from the government for the cancellation.

The Transport Ministry has agreed to reassure the banking interests by guaranteeing bank loans being put into the project. Should the concession collapse, the government would buy the assets for at least the amount of bank loans drawn down at that stage.

THSRC still hopes to award the M&E systems contracts in October, so that construction can get under way early next year. However, all parties now accept that the completion date has slipped by two years to 2005.