Wed, Jul 14, 2004 - Page 10 News List

Taipower unfazed by storm's damage

NO PRICE HIKE The company said that losses caused by Tropical Storm Mindulle should be no more than NT$10 billion, and that this would not affect profits

By Jessie Ho  /  STAFF REPORTER

The finances of state-run Taiwan Power Co (Taipower, 台電) remain stable, despite the dire losses the company suffered after three of its hydroelectric power plants were damaged by Tropical Storm Min-dulle earlier this month, a company official said yesterday.

"We still have no precise statistics on our total losses, as flood water in the Chingshan and Tehchi plant still has not completely run off, but I think it will not exceed NT$10 billion in total," Taipower Spokesman Lee Jiin-tyan (李錦田) said.

Heavy rains and mudflows caused by Mindulle inundated the three power plants along the Tachia River in Taichung County, submerging the Chingshan plant and ruining part of the infrastructure at the Tehchi and Tienlun plants.

Repairs and reconstruction at the plants fall under capital expenditure, and therefore should not dent the company's operational and finance report this year, Lee said.

Tony Tsai (蔡東松), an analyst with Taiwan Ratings Corp (中華信評), a local unit of Standard and Poor's Rating Services, said the corporation will not downgrade Taipower's rating because of the damage.

Taiwan Ratings gave Taipower a stable corporate credit rating of "twAAA," and a short-term rating of "twA-1" in February, given that Taipower still enjoys a monopoly in the generation, transmission and distribution of electricity in the country.

Taipower is 97-percent owned by the government. With total capital assets of NT$1.2 trillion, the losses at the three power plants are relatively minor for Taipower, Tsai said

These plants account for less than 2 percent of Taipower's installed capacity, which can be easily replaced by nuclear power. However, the damage makes it harder for the company to attain the profit it is required to turn in to the government treasury this year, he said.

Taipower has already come under pressure due to several fuel price hikes this year, Lee said.

The price of coal imported from Australia, for example, has surged from US$25 per metric tonne to US$60 per tonne, Lee said.

Oil prices and shipping charges have also increased, which adds NT$21.2 billion to the company's fuel expenses, he said.

Taipower needs to turn in NT$15.6 billion to the government this year, but for the first four months of the year, Taipower reported NT$484 million of pre-tax income, which is NT$1.96 billion short of the goal set by the government. Among a number of state-run enterprises managed by the Ministry of Economic Affairs, Taipower and Aerospace Industrial Development Corp (漢翔) were the two firms that failed to attain their goals.

Despite the negative circumstances, Lee said that Taipower has no plans to raise electricity prices, which have been fixed at their current level for over a decade.

"We are waiting for better timing to hike the prices ... after all, it will affect the whole nation. So before we consider hiking prices, we'll try to bring down our costs as much as possible," Lee said.

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