Bullet Train KTX Records Only Half of Expectations

    July 09, 2004 20:20

    The number of passengers and income of the KTX bullet train have recorded no more than half of original expectations. Inevitably, the government has to use taxes paid by the public to pay the principal and interest of the KTX, far from achieving the profitable management of the bullet trains. The KTX consumed more than W12 trillion and began its services on April 1.

    According to a report, which was made by the Korea National Railroad (KNR) to mark the 100th day of the launch of the KTX, a daily average of 70,250 people, 47 percent of the initial expectations, use the bullet trains and W2.11 billion has been earned, which is 54 percent of the targeted income. Experts analyze that this poor performance will continue in the future because the passenger numbers and the income have remained at a similar level each month and there is no clear sign of improvement.

    Therefore, the KNR forecasts that the KTX will produce W570 billion in deficits this year. And also, the KNR should give up on its debt payment plan in which the company intends to pay off its loan by 2013.

    An official at the KNR said that if the situation goes unchecked, the KNR has to borrow money again to pay the principal and interest of the KTX and the total liabilities will continue to grow.

    The KNR plans to request the Ministry of Construction and Transportation to increase the government’s share in paying the construction expenses by 15~35 percent to 50~70 percent and to defer the payment of overseas and domestic debts. The government is originally supposed to cover 35 percent of the construction costs.

    An increased burden of the government in paying the costs means using taxes paid by the public. And the extension of repayment is just a stopgap measure unless the KTX doesn’t have an independent profitable system.

    The Construction and Transportation Ministry said that it failed to recognize that people don’t change their transportation patterns overnight and the need for transportation is on the decrease due to a continued economic recession.

    Experts, however, point out that the basic reason is that from the start, the KNR advertised unreasonably exaggerated profits in order to rationalize the construction of the KTX, on which was spent an astronomical amount of money.

    (Lee Chung-il, cilee@chosun.com)
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