TAIPEI – Private consortiums from Taiwan and Japan signed a memorandum of understanding Tuesday for the purchase of bullet trains worth up to NT$95 billion (about $3 billion) for Taiwan’s planned high-speed railway in what is the largest-ever procurement deal between the two sides.
With the signing at the headquarters of the Taiwan High Speed Rail Corp. (THRSC) in Taipei, the Mitsui & Co.-led Taiwan Shinkansen Consortium has become the sole negotiator for the sale of the core system of the high-speed railway, THRSC Chairperson Nita Ing said.
The Japanese side also committed to becoming one of the major shareholders in the Taiwanese consortium, she said.
Taiwan’s 345-km, high-speed railway will use trains modeled after Japan’s latest bullet train, the Nozomi 700E, which West Japan Railway put in service March.
THRSC officials said the contract value falls within the NT$95 billion budget but refused to release detailed figures.
The Japanese side has pledged to take a 10 percent stake in THRSC that will ultimately rise to NT$12 billion, THSRC spokesman Lin Tien-sung told reporters.
THRSC, which has raised NT$30 billion from its shareholders, needs to eventually increase its capital to NT$120 billion to cover its share of the NT$450 billion build-operate-transfer project.
Lin said working out details of Japanese government loans for the deal will take another “six to 12 months,” but would not affect the signing of the formal contract.
Ing called the signing of the memorandum “one of the most important milestones in this project,” and noted that the two sides hope to sign the final purchasing contract “no later than July.”
She said completion of the final contract hinges on “a few technical details,” but did not elaborate. In addition to rolling stock, the Taiwan Shinkansen Consortium will supply signal and communication systems as well as electrification systems, she added.
Assisted by the Japan Railway Technology Service, JR Tokai and JR West, the Taiwan Shinkansen Consortium will help the Taiwan side train personnel and will support maintenance for an initial five-year period.
The signing was witnessed by Ing, Kazuo Sato, executive vice president of Mitsu & Co., and other top executives of the Japanese consortium’s seven members.
Japan’s top envoy to Taiwan, Shintaro Yamashita, who heads the Interchange Association’s Taipei office, was also present, but Tokyo refrained from dispatching a high-ranking government official, apparently to avoid angering Beijing.
It is the first time for Japanese high-speed-train technology to be sold overseas.
Mitsui & Co.’s Sato said the consortium hopes the Taiwan precedent will boost prospects for Japanese bullet trains to be chosen for a high-speed railway being planned to link Beijing with Shanghai.
THRSC originally picked the European Eurotrain consortium as its partner, but later reopened the bidding process and awarded the Taiwan Shinkansen Consortium preferred-bidder status in December.
In February, THRSC signed a syndicated credit agreement worth NT$323 billion with 25 local banks, clearing up funding problems that threatened to further delay the mammoth project.
The Taiwan Shinkansen Consortium groups Mitsui & Co., Mitsubishi Heavy Industries Ltd., Kawasaki Heavy Industries Ltd., Toshiba Corp., Mitsubishi Corp., Marubeni Corp. and Sumitomo Corp.
The railway, which will run along Taiwan’s western coast, will cut travel time between Taipei in the north and the southern port city Kaohsiung to 90 minutes.