Two major local newspapers prominently reported on their front pages the same day that the struggling Taiwan High Speed Rail Corp.

(THSRC) may soon change guard, with the government taking over management of the rail system that went into operations less than three years ago.

According to the reports, THSRC Chairwoman Nita Ing may resign later this week to pave the way for the government to take over the company.

Once Ing steps down, the reports said, incumbent THSRC Chief Executive Officer Ou Chin-der, a former Taipei deputy mayor who is reportedly one of President Ma Ying-jeou's trusted friends, will fill the post.

If the move is confirmed, it would mark the failure of Taiwan's biggest build-operate-transfer project, under which the private company built the rail system and was supposed to run it for 35 years before transferring ownership to the government.

Asked about his views on the reports, Wu said he has been informed of Ing's intention to resign.

"The government's stance has been that operation of our country's only high-speed railway should not be suspended and that its financial status should be subject to effective supervision, " Wu said. Under these two premises, the government will respect whatever decisions the THSRC board of directors makes, he added.

As the government and several state-owned companies and organizations have stakes in the company, Wu said, the government looks forward to seeing the high-speed rail system operate smoothly with sound financing.

The high-speed rail company is scheduled to convene an extraordinary board meeting Sept.22 to select a date between late September and early October for an extraordinary shareholders' meeting.

Corporate sources said that the meeting agenda does not list any personnel change proposals, but other sources said that if Ing offers to resign at the meeting, the government may arrange for Ou to first gain a seat on the board and then have him elected board chairman. Ou is not a board member at the moment.

Of the 14 seats on the THSRC board, two are held by independent directors and four are filled by representatives of fully or partially government-controlled organizations -- Taiwan Sugar Corp., the CTCI Foundation, the China Aviation Development Foundation and China Steel Corp.

The THSRC has a paid-in capital of NT$105.3 billion (US$3.23 billion) but its accumulated losses had reached NT$70.2 billion as of the end of June this year, or about two-thirds of its capital.

The company informed the Ministry of Transportation and Communications (MOTC) of its financial woes in February. After discussions with the Executive Yuan, the MOTC agreed to assist the company in resolving its financial difficulties by seeking new bank loans.

However, media reports said, creditor banks were reluctant to approve new loans unless the THSRC's five original shareholders put in more capital. According to the reports, if Ou replaces Ing as the company's new chairman, the government will endorse the new loans.

Citing unidentified banking sources, the reports said Ing has agreed to resign and let the government take over the company, after discussions with creditor banks.

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