Debt-hit Portugal to press on with high-speed rail: minister

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Portugal on Monday vowed to press ahead with a costly high-speed rail link between Lisbon and Madrid, even as the debt-hit nation warned it may require a bailout.

"The work on the Poceirao-Caia section should start in the first quarter of 2011," Transport Minister Antonio Mendonca said during a parliamentary debate.

The 167-kilometre (104 miles) stretch marks the first phase of the project to link the Spanish and Portuguese capitals by bullet train, and construction is expected to cost 1.36 billion euros (1.86 billion dollars).

Bidding for the construction of the second section was cancelled in September due to the country's financial difficulties.

Under an agreement on next year's budget, the minority socialist government agreed to suspend major public works for "reevaluation".

"For some, reevaluate means stopping everything that is under way. This is not our interpretation," said Mendonca, adding that the Lisbon-Madrid link remained a priority.

Earlier this year, the government announced the cancellation of two other high-speed lines and the construction of a new airport at Lisbon.

The yield on Portuguese 10-year bonds rose above 7.0 percent on Wednesday for the first time since it joined the eurozone, and was at 6.597 percent in trading Monday.

Finance Minister Fernando Teixeira dos Santos warned the possibility of Lisbon requiring international financial aid was "high", in comments published by the Financial Times.

© 2010 AFP

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