Yongin transit project in jeopardy

Yongin’s ambitious plan to launch a fully automated 18.5-kilometer rapid transit system this year is on the brink of cancellation, with its operator, Yongin Rapid Transit Co., saying it wants to terminate its contract because the city has refused to approve completion of construction.

The project, called Yongin Everline, was begun in 2005 by a mayor backed by the Grand National Party, but its opening has been delayed more than six months because the new mayor, Kim Hak-kyu, who ran on the Democratic Party ticket, opposed the project.

The Yongin Everline was scheduled to open in July. .

“Because the Yongin city government refused to approve completion of the project, we notified [the city] we will terminate the contract,” said Jang Eun-ryeong, a senior official at Yongin Rapid Transit Co. Saying the company faces “insurmountable” losses, Jang said, “We can’t afford an operating fee that costs between 2 billion ($1.77 million) to 3 billion won per month.”

The city, though, says the project is being delayed due to construction problems, not politics.

City officials said the opening of the rail service was delayed because its contractor didn’t make improvements that the city requested in December.

The city has demanded that the contractor improve safety and noise conditions, but none of the changes were made, an official said.

“We are in the process of canceling the contract, and we’ll take this matter to court,” said Kim Yong-su, a city official.

If the contract is canceled, the city will become the owner of Everline and the city is obligated to reimburse private investors who financed the project. Of the 1 trillion won ($889 million) used for the Everline project, private investment is estimated to be 600 billion to 700 billion won.

The cancellation of the project could even lead to an international legal dispute - one of the investors is Canada’s Bombardier Advanced Rapid Transit. If Yongin doesn’t pay the company, it will likely file a lawsuit with the International Court of Arbitration under the International Chamber of Commerce, a Paris-based dispute resolution tribunal. Legal experts say it could take over a year to resolve the issue.

By Yu Kil-yong [mijukim@joongang.co.kr]