Bill to privatize railways draws immediate fire

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Bill to privatize railways draws immediate fire

The government on Tuesday sent to the National Assembly two bills that would gradually privatize the nation's railways between 2003 and 2008 in hopes of improving their services and financing.

The 28,000 members of the nation's railroad union, opposing the plan, threatened to strike, and the political sector expressed skepticism.

The legislation would dismantle the Korean National Railroad and the Corps for the Seoul-Busan High-Speed Railway. Their functions would be absorbed by two new public corporations.

The "Railroad Facilities Corporation" would be set up next July to oversee construction and manage the assets of the standard and the high-speed railroads. The "Railroad Corporation," to be set up the next year, would oversee their operations. The Railroad Corporation then would be privatized gradually through 2008.

The Ministry of Construction and Transportation said that it is considering setting up individual companies in charge of managing the high-speed trains, the on-train services and maintenance of the tracks, all falling under the Railroad Corporation.

Government officials said the integrating and privatizing operations make sense because the national railroad's debts are small but its profitability is low, while the high-speed railway's debts are larger but its potential profitability high.

The overall debt of the railroad industry is 8.4 trillion won ($6.6 billion), with 1.5 trillion won owed by the Korean National Railroad and 6.9 trillion won by the high-speed railway. Analysts expect the debt to increase to 13 trillion won in 2004 and to 21 trillion won in 2011, as construction of the high-speed railway continues through 2004.

The railroad union criticized the plan as likely to cut public service and lead to job losses.

"Should the railroads be privatized, the un-profitable lines will be closed down, the price of the service will go up and other 'public service' side of the industry will be eroded," a union statement said.

Legislators, too, were cool.

"We have no reason to expedite a measure that will no doubt cause controversy ahead of the two elections next year," said a policymaker of the Millennium Democratic Party. "The sentiment that privatization is premature is prevalent."

The administrations of Roh Tae-woo and Kim Young-sam attempted to privatize the railways, but did not even get the necessary bills drafted in face of fierce union opposition.



by Kim Chang-woo

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