This meant that when the line opened it was only carrying around a quarter of the expected number of passengers and its debt had shot up by 20% - an ideal recipe for financial disaster, which it quickly proved. To make matters worse, THSRC had few friends. Unsurprisingly, its bankers were becoming increasingly concerned about the railway's ability to service its debt let alone repay it. The government refused to bail THSRC out, although it demanded more seats on the board. The public had lost faith in the project and the media were increasingly hostile.
Ou, who has a sound track record for dealing with natural disasters such as earthquakes and floods, soon found himself in the driving seat. He drew up a four-point plan designed to put the railway back on track. But even he has only been able to push through one of his objectives, albeit probably the most important one. This was to restructure the debt to reduce the interest rate to 1.83% - from a peak of 8% on some of the debt - by getting the government to guarantee most of the debt.
This, coupled with an upturn in the economy and a drive to get more people to take the train, has enabled THSRC to bring its finances under control and produce its first profit.
Ou now has time to achieve his other three objectives: to extend the concession beyond the original limit of 35 years, as Eurotunnel has done successfully, which would reduce the depreciation burden and make THSRC more attractive to investors, to increase capital and reduce the debt ratio, and to develop new revenue streams. THSRC was given a dowry of land around five of its stations to develop commercially. While Ou says the time is still not right to do this, it does represent a real opportunity for the future.
Objectors to high-speed rail projects around the world have often used THSRC's financial woes as a weapon in their battle against such schemes, but thanks to Ou's efforts, this is now denied to them. Indeed, THSRC can instead be used by high-speed rail supporters to demonstrate that it is possible to fund a project almost entirely through private capital and to make money doing so, even in very difficult circumstances.
Last month, Mr Guillaume Pepy, president of French National Railways (SNCF), told IRJ that TGV high-speed services make enough profit to cover all their infrastructure costs. In fact, TGV is so profitable that infrastructure manager RFF has been increasing its access charges for TGV services to help fund repairs to the conventional network. Needless to say, Pepy is not happy with the situation, but it is more evidence that high-speed rail is not a white elephant and can be a sound investment choice.
But there are wider issues to be considered when deciding whether to build high-speed lines. As Pepy observed, TGV saved SNCF's long-distance passenger business from oblivion by making rail highly competitive with road and air.
Rail transport has paid a heavy price for failing to invest in some form of high-speed rail in North and South America for example, where for the most part only a skeleton of medium and long-distance passenger trains survive in Canada and the United States. Partly because inter-city passenger services have been allowed to dwindle, proponents of high-speed rail in the United States have been easy prey to those opposed to it, even when their arguments against it are largely ill- informed and frequently misleading. It is also difficult to promote high-speed rail when the success stories are located on another continent, and for most people the car and the plane are the only viable choices.
Even in a densely-populated country like Britain, where high-speed rail has the potential to be a real success, a strong campaign is being waged against plans to build HS2, a high-speed line linking London and Birmingham. There are two objectives: to create more capacity for the future as rail traffic is growing strongly, and to cut journey times from London to Britain's northern cities. But opponents choose not to see the benefits and believe that the current rail network can go on absorbing more and more traffic while continuing to be competitive.
If politicians, planners and railways are serious about switching people travelling between major cities from road and air to rail, then investment in high-speed rail is the only option. It is simply the 21st century inter-city passenger railway.
