Japan’s Obayashi Corporation, in JV with local firm Fu Tsu Construction, has become the first contractor to break ground on Taiwan’s US$12bn, 345km high-speed railway between Taipei and the southern port city of Kaohsiung.

In a ceremony held on April 14, the two firms signified the start of work on a 53km stretch of railway from Panchiao, near Taiwan’s capital Taipei, via Taoyuan close to Taipei’s international airport to Hsinchu County, home to many top high-tech companies.

The section include a 6.5km long tunnel, one of the longest on the whole railway, together with 29km of elevated track. Taoyuan railway station will also be built underground, the only one of 12 planned stations to be constructed below ground.

Speaking at the ceremony Taiwan High Speed Rail Corp. (THSRC) chairwoman Nita Ing was confident the rail project, which has already been delayed by nearly two years as a result of political and financing wrangles, will be completed by 2005.

Despite a formal start of work, these problems could continue after it was revealed a controversial US$300M deal for rolling stock has still not be signed five months after a Japanese consortium was favoured.

A THSRC spokeswoman said no date for an official contract signing has been fixed with the Mitsubishi-led Shinkansen consortium because Japan and Taiwan have still to finalise Japanese financing for the contract.

THSRC announced in December that the Shinkansen group was set to supply high-speed locomotives and carriages. This prompted a huge outcry from the rival European group that included Alstom and Siemens that included heavyweight political lobbying by French and German politicians in an unsuccessful attempt to get the decision reversed.