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Privatization of the Taiwan High Speed Rail ProjectTaiwan High Speed Rail Project
T C KaoT.C. Kao
Vice President ‐ Engineering (retired) Taiwan HSR Corp.ProfessorNational Taiwan University Visiting Scholar and ProfessorUniversity of Illinois atUniversity of Illinois atUrbana‐Champaign
NN ti lti l TT ii
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NNational ational TTaiwan aiwan UUniversityniversity
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Why does Taiwan needHigh Speed Rail?High Speed Rail?
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GDP of Taiwan (1970‐1997)
P of Taiwan
Dollar)
Per GDP
(US
tecreasing
Rat
(%)
3Ann
ual In
Year
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Congestion of the Freewayg y
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94% of the population live on the west corridor
TAIPEI, Taoyuan
Population / m2
>150005000‐150003000‐50001000‐3000500‐1000300‐500100 300
Taichung
Hsinchu
100‐300<100
g
T iTainan, Kaohsiung
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Why does Taiwan need HSR?
To enhance economic growth •High Capacity •Energy Conservation gy•Low Pollution•Land Use Efficiency
To open up more areasfor development
To relieve transport congestionTo relieve transport congestionalong the western coastal plain
TRACapacity
TRARail
HSR
High
Car
BusAirplane
Low
6Speed (Km/Hour)100 300 600
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Why BOT (Privatization)?
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Why Privatization ?
• Lessons learned in the Taipei Mass Rapid TransitLessons learned in the Taipei Mass Rapid Transit projects‐ efficiency of public works
• Competitions of public fundsCompetitions of public funds
• Entrepreneurship of private institute
• Efficiency of private management
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A Bold Start
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THSRC BOT Scheme
Concession PeriodConcession Period Transfer assets to
Planning byGovernment
35 years35 years
OOB ildB ild T fT f
assets to government
Pl iPl i
Government10 Years
OperateOperateBuildBuild TransferTransferPlanningPlanning
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THSR is the largest Build‐Operate‐Transfer infrastructure project in the World
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Fierce Competition
• China High Speed Rail Consortium
• Taiwan High Speed Rail ConsortiumConsortium
– KMT backed enterprise– Japanese suppliers
Consortium– 5 young entrepreneurs– 5 successful private
icompanies– European Partners
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(中央社)(中國評論新聞網)
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An offer government can not resist
• China High Speed Rail ConsortiumChina High Speed Rail Consortium– Government financing ‐ NT$ 149.5 billions
• Taiwan High Speed Rail Consortium– Government Financing ‐ NY$ (‐) 105.7 billionsg ( )
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The World’s First Privatized HSR Rolled OffThe World s First Privatized HSR Rolled Off
• Main Characters‐Main CharactersA government with limited privatization experienceexperience
+An eager concessionaireAn eager concessionaire
W ld’ l BOT P j⇒World’s largest BOT Project⇒ A Rocky Road
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Project PlanProject Plan
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High Speed Rail Route Plan
• The total length of the High Speed Rail is 345 km (214 mi.) from Taipei to Kaohsiung HSR Sijhih Depot
HSR Nangang Station
HSR Banciao Station
and passes through 14 cities and 77 towns.
• Stations to be constructed under the initial phase of the Project:
j p
HSR Hsinchu Station
HSR Taoyuan Station
HSR Taipei StationHSR Lioujia Depot
Taipei, Banciao, Taoyuan, Hsinchu, Taichung, Chaiyi, Tainan, Zuoying (for Kaohsiung)
HSR Wurih Depot
HSR Changhua Station
HSR Taichung Station
HSR Miaoli Station
• Stations planned for later phases of the project: Miaoli, Changhua, Yunlin, Nangang
• Main Workshop: Yanchao (near Kaohsiung)
HSR Taibao Depot
HSR Chiayi Station
HSR Yunlin Station
• Stabling Yard : Sijhih, Wurih, Zuoying
• Infrastructure Maintenance Bases:
Sijhih Lioujia Wurih Taibao ZuoyingHSR Zuoying Depot
HSR Zuoying Station
HSR Tainan StationHSR Yanchao Main Workshop
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Sijhih, Lioujia, Wurih, Taibao, Zuoying
• Maintenance Center: ZuoyingN
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Comparison of Scale Mapsof Taiwan & Illinois
ChicagoTaipei
St. Louis
Kaohsiung
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Master Program
20042000 2001 2002 2003 2005 2006
Civil Works
ITEM2000 04~2004 09
Stations•Design/Tender•Build
Civil Works•Design/Build
2000.04 2004.09
1999.11~2000.11 2002.08~2002.112000.04~2006.02
Depots•Design/Tender•Build
•Build
2001.06~2003.082003.08~2006.10
Core System
Track Works•Design/Build
2002.06~2005.04
2001.03~2005.11
Testing & Commissioning
y•Procurement•Installation
00 .03 005.
2005.01~2006.12
2003.09~2005.11
17Copyright © 2006 Taiwan High Speed Rail Corporation. All Contents Confidential.
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Copyright © 2006 Taiwan High Speed Rail Corporation. All Contents Confidential.
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T 700 Trainset
Standard class• 12 coaches• 1 business ，11 standard classbu ， a da d a• 989 passenger seats
Business class
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30 Trainsets Ready for Operation
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Copyright © 2006 Taiwan High Speed Rail Corporation. All Contents Confidential.
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Top Operation Speed 300 km/hr
Taipei‐ Taichung 45 min
Taipei‐ Kaohsiung 90 min
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Impact on Regional Development
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West Corridor Regional City
CKS TaipeiTaoyuanTaipeiTaoyuan 19.75 min
After the completion of High Speed Rail
1‐Day Living Periphery‐ Round trip within one dayHsinchuTaipei ‐ BAC ‐ TAY ‐
Hsinchu 32.75 minWest Corridor Megapolis
g
TaichungTaichungTaipei‐ BAC –Taichung 45.75 min
Northern Taiwan Metropolitan Area
Central Taiwan Metropolitan Area
Southern Taiwan Metropolitan Area
After the completion of Highway
Tainan Kaohsiung
Chiayi
TainanTaipei
Taipei ‐ BAC ‐ TAC‐ Chiayi 83.75 min
Taipei-BAC ‐ TAC ‐ CHA
Southern Taiwan Metropolitan Area
Kaohsiung
TRA
Kaohsiung
Before the completion of Highway
Taoyuan
Hsinchu
Taichung
‐ Tainan 103 min
Taipei –Zuoying 90 min
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Expwy
HSR
g yChiayi
Tainan
Kaohsiung
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New Taiwan –– Taipei’s View
Taipei
Taipei
Hsinchu
Taichung
HsinchuHsinchu
Taichung
Tainan Sun Moon Lake
A‐li Mountain
Sun Moon Lake
Kaohsiung
Kending
Taidung
A‐li Mountain
TaidungTainan
Kaohsiung
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Kending
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New Taiwan –– Taichung’s View
Taipei
Taipei
Hsinchu
Hsinchu
T i hTaichung
Sun Moon Lake
Taichung
Kaohsiung
Tainan
Sun Moon Lake
A‐Li
A‐Li Mountain
TaidungTainan
Kending
TaidungMountain
Kaohsiung
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Kending
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New Taiwan –– Kaohsiung’s View
Taipei
Hsinchu
Taichung
Sun Moon Lake
A‐Li Mountain
TaidungTainan
TaipeiHsinchu
Taichung
Tainan
Sun Moon Lake
KaohsiungKaohsiung
TainanTaidung
A‐Li Mountai
n
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Kending
Kending
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Taoyuan Station – 2000 vs. 2007
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Zuoying Station – 2000 vs. 2007
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New Towns
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New High Speed Rail TownsTaoyuanChiayi
N
Taoyuan
Taoyuan
Hsinchu
Chiayi
Hsinchu
HsinchuTaichung
Tainan HsinchuHsinchu
Chiayi
Tainan Hsinchu
Taoyuan :490 ha Taichung
Tainan
Hsinchu : 309 ha
Taichung : 272 ha
Chiayi : 135 ha
Tainan : 299 ha
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Total : 1,505 ha
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Scope of Concession
• Type of Development Right: Superficies Right
HSR Alignment g
• STATION AREA:– Station Land (35 Yrs)
• Station, Transportation facilities,
Station Land
Alignment
and Services– Business Development Land (50 Yrs)
• Station Plaza• Station Development Area• Station Development Area
– Hotel, Convention and Exhibition, Restaurant, Recreation and Entertainment, Business, Retail Facilities, Financial Services, General Business Development Services, Telecommunication Services, Transportation Services, Tourism Related Services, and Office Complex
Land
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Integrated Railroad Network
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Integrated Railroad Network
南港
Taipei
板橋
桃園
HSR
新竹
松山
萬華
竹東
內灣
HSR
HSR Station台鐵 TRA
台鐵車站
桃園 中壢
苗栗
三義
新竹台鐵車站TRA Station
苗栗竹南
(
新烏日)
台中
彰化
雲林
嘉義
台南 Kao
台中
三義
豐原通霄
大甲 ohsiung
嘉義
台南
斗六
善化
員林
永康
斗南
二水
田中
大湖
路竹
楠梓
彰化
沙鹿
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集集
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New Life Style
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Milky Way High Speed Rail Restaurant
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New Life Style –Affordable
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Copyright © 2006 Taiwan High Speed Rail Corporation. All Contents Confidential.
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New Life Style – Home Coming
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Is it successful?
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GDP of Taiwan (1970‐2008)GDP of Taiwan (1970 2008)
Taiw
an
llar)
Per
GD
P of
(U
S D
o l
easi
ng R
ate
%)
4545YearYear
Ann
ual I
ncr (%
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Project success criteriaProject success criteria
• Project Management SuccessProject Management Success
– Time
– CostCost
– Quality
• Product success
Meeting the project owner’s strategic objectives– Meeting the project owner s strategic objectives
– Satisfying the user’s needs
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Taiwan High Speed Rail
• Rapid economic development from 1960s to 1980sRapid economic development from 1960s to 1980s
• Kick‐off in 1989
• Privatized in 1993Privatized in 1993
• BOT agreement signed in 1998
• Total length= 345 km• Total length= 345 km.
• Commercial service launched on January 5, 2007
• World’s first private high speed rail• World s first private high speed rail.
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Korean High Speed Rail
• Rapid economic development of Korea betweenRapid economic development of Korea between 1960s and 1980s
• The decision to construct a high speed line linking g p gSeoul and Busan was made in May 1989.
• Construction started in 1992
• Total length= 412 km
• Commercial service launched on April 1, 2004 ( only p , ( y238 km high speed line)
• Government sponsored public work
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p p
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Similarities
• Stimulated by a pressing economic need arising from A i ’ id i d l b 1960Asia’s rapid economic development between 1960s and 1980s.
• Aimed at solving freeway congestion arising from the rapid economic growth.
• Each planned to connect the capital city with the countries’ largest port.
• Similar route distances
– 345 kilometers for Taiwan
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– 412 kilometers for Korea
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Similarities (2)
• Aimed at achieving the top operational speed g p p pof 300 km/hr.
• Initiated in the same year (1990)• Initiated in the same year (1990).
• Routed through the most densely populated city corridors:
– THSR serves approximately 94% of Taiwan’s pp ypopulation (22 million)
– KHSR serves approximately 71% of South Korea’s
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KHSR serves approximately 71% of South Korea s population (35 million.
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Route of the KHSR
Seoul
Busan
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Busan
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Construction history‐ KHSR
• Route selection around KyungjuRoute selection around Kyungju
• Closed mines discovered underneath the tunnelstunnels
• Indecision of station location
• Naming a new station
• Tunnel under Mount Cheonsungg
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Time
Time can be measured in terms of schedule overrun ratio:Time, can be measured in terms of schedule overrun ratio:a
s ii p
i
TOT
=
Dates Planned Start date
Planned Completiondate
ActualStartdate
ActualCompletion date
Planned Duration(Months)
ActualDuration (Months)
Overrun Ratio
HSRsdate date date date (Months) (Months)
TSHR March,2000
Oct,2005
March,2000
Jan,2007
68 82 1.21
KSHR(Phase 1)
March,1992
Dec,1998
March,1992
April,2004
82 145 1.77
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CostCost
Cost can be determined by computing actual cost as aCost, can be determined by computing actual cost as a percentage of the initially planned budget:
aC
Costs Initial budget Final cost Length Unit Cost Overrun Overrun
C ii p
i
COC
=
Costs
HSRs
Initial budget(billion US$)
Final cost(billion US$)
Length (km)
Unit Cost(million
US$ per km)
Overrun(billion US$)
Overrun Ratio
THSR 14.4 15.24 345 44.2 0.82 1.06
KHSR 5.31 11.58 238 48.7 6.27 2.18
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(Phase 1)
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Quality‐ On time performanceQuality On time performance
“on time performance” criterion
HSRs THSR KHSR (Phase 1)
p
Performance
( )
On time performance 99.4% 95.5%
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Project success criteriaProject success criteria
• Project Management SuccessProject Management Success– Time
– Cost
– Quality
• Product success– Meeting the project owner’s strategic objectives
– Satisfying the user’s needs
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Typical trend of ridership increase
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Ridership ComparisonRidership Comparison
120 ay)
100
gers
/ per
da
60
80
103
Pass
eng
20
40
Rid
ersh
ip (
KHSR
THSR
0
20
0 10 20 30 40 50 60
Dai
ly R THSR
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Months of Commercial Service
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Lessons learnedLessons learned
The privatization of the THSR project presented a unique p p j p qopportunity to explore the effect of privatization on HSR projects:
• A privatized HSR project will have a better chance in achieving th t diti l j t t f ti t dthe traditional project management success of time, cost and quality. Much contribution from less public and political interference/ interruption.
• A privatized HSR requires longer time in build up its ridership.
• A privatized HSR project is a commercial investment for the p p jconcessionaire and a government sponsored HSR is a national campaign.
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Is THSR a success ?
• Taiwan needed HSR => They got it.
T i t ld lik it i ti d > It• Taiwan government would like it privatized=> It was built and operated as what was planned.
• THSR was built successfully according to Project management success criteria:time, cost, and quality
• THSR has not met the owner’s ridership goal=> product failure ?
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But
• What would happen if THSR project was built by government?
• What would be the ridership if THSR wasWhat would be the ridership if THSR was operated by the government ?
• Is privatization of THSR successful ?( To whom ?)
• A story yet still to be unfolded.
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EndEnd
A i ?Any questions?
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