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The Seoul-Pusan High-Speed Railway Project (HSR), the most expensive transportation project ever undertaken and perhaps the nation's most important, seems to be finally back on track.
On August 20, the government announced the selection of GEC Alsthom of France, better known as the maker of TGV (Train a Grande Vitesse), as the train supplier for Korea's first-ever high-speed railway between Seoul and Pusan (Kyongbu Line), which is scheduled to begin full operations in 2001.
Transportation Minister Lee Ke-Ik reported that GEC Alsthom had outscored Siemens (ICE) of Germany to gain priority in the final contract negotiations.
In summarizing the extensive evaluation process, Lee said the French bidder beat out its German competitor in key criteria such as cost effectiveness, financing conditions, contract conditions and operating experience.
"Of the 302 assessment items, GEC Alsthom was superior to Siemens ICE in 143 items, while the latter came out on top in 105 items, including train technology and technology transfer," said Lee, emphasizing that the evaluation process had been 100% fair and objective. For the remaining 54 items, the two were considered even.
According to Park Yu-Kwang, president of the Korea High-Speed Rail Construction Authority (KHSR), the French bidder's final price was about US$2.4 billion (1.9 trillion won). Of note, this represents a drop of about US$230 million (187 billion won) from the price offered by the TGV maker in its fifth submittal, according to Lee.
In addition, the GEC Alsthom proposal included loans with attractive terms to finance Korea's purchase of the trainsets, said Park. The loans will be repaid over 10 years after an eight year grace period.
The government's selection, however, does not guarantee that the French bidder will be awarded the contract; it must still satisfactorily negotiate the final contract terms with the government.
The possibility of not finalizing the contract, however, seems highly unlikely, given the all-out efforts of the two bidders in getting to this point. "The final negotiations for the contract will be held for about two months in two phases," Lee said.
Undoubtedly, this has been one of the most fiercely contested bidding competitions in the nation's history. The selection of a high-speed railway contractor among proposals from France, Germany and Japan was itself a high-speed drama involving intense...