S Korea Panel Moots Delaying Fast Rail Link
A South Korean government commission has asked for studies to be made on delaying delivery of a first batch of trainsets, worth $1billion, for a high-speed rail link, a spokesman for supplier GEC Alsthom said.
GEC Alsthom, a joint venture between Britains GEC Plc and Alcatel Alsthom, is contracted to build the first 12 trainsets for the Korea High-Speed Rail Construction Authority (KHRCA) which is building a link between Seoul and Pusan.
The commission last asked our client to look at the possibility of delaying the delivery of the first 12 trainsets, which are currently being made in Europe, the spokesman said.
The rail authority immediately said this was not possible, nor desireable, he said.
The commission also asked the rail authority to consider delaying construction of the high-speed track for a second leg of the link and use conventional track, he said.
That should not affect the supply of a total 46 trainsets, as these would still be needed for the link, he said.
Korea will make 24 of the trainsets.
GEC Alsthoms contract is covered to the maximum permitted level by insurance from the French Coface export credit agency, he said. The insurance covers manufacturing risk and non-payment.
South Korea will delay or cancel some major infrastructure and defence projects as part of efforts to slash spending, the head of president-elect Kim Dae-jungs transition team said last week.
A statement from the team in charge of taking over state affairs from the current government quoted its leader, Lee Jong-chan, as telling experts from Standard and Poors Corp that this years state budget, set at 75 trillion won ($42.7 billion), would be cut by about 10 per cent.
The high-speed railway, harbour construction and other major projects will be delayed or cancelled, Lee was quoted as saying. Defence spending will also be a target for the budget reduction.
In September, the rail authority delayed completion of the Seoul-Pusan high-speed railway project by three and a half years to November 2005, which raised the costs to 17.63 trillion won from 10.74 trillion.
GEC Alsthoms South Korean partners are Hyundai Precision and Heavy Industries Co and Daewoo Heavy Industries.