Ministry to hold utility rates steady

Amid fears that consumer prices will continue to rise, driven by soaring raw materials costs, the Ministry of Economic Affairs yesterday reiterated that fees for utilities such as water and electricity will not rise within the year.

"We will deliberate on the time and range of price increases on water and electricity, as the increases are expected to trigger inflation or prices rises in other goods," Steve Chen (陳瑞隆), vice minister of economic affairs, said during a legislative session yesterday. "We'll not raise fees this year."

Adjustments to water and electricity prices are necessary, however, Chen said.

Citing statistics from the Taiwan Water Supply Corp (自來水公司), he said the cost of water has been fixed for 10 years at NT$10.77 per cubic meter, the same level as the average selling price.

Even so, Chen said increases in water prices would have little impact on the economy, citing a study conducted by the Taiwan Institute of Economic Research (台經院).

The study shows that an increase of between NT$0.5 and NT$9 per cubic meter of water would only undercut the nation's GDP by 0.004 percent to 0.083 percent.

As for electricity rates, Chen said prices for imported coal have surged by 120 percent since August last year. If Taiwan Power Co (台電) maintains current rates, the state-run company will report losses of NT$9 billion next year, he added.

However, Chen could not guarantee that another increase in oil prices wasn't in the pipeline within the year.

Crude for November delivery on the New York Mercantile Exchange stood at US$53.28 in mid-afternoon Asian trade yesterday, down US$0.03 from Friday.

To reflect costs, the nation's two oil suppliers, Chinese Petroleum Corp (CPC, 中油) and Formosa Petrochemical Corp (台塑石化) earlier this month ratcheted up wholesale gasoline prices for the fifth time this year, making consumers pay 12 percent more than they did at the beginning of the year.

But legislators said that the CPC, a state-run company, should not further raise prices because the company had achieved the level of profits it is required to turn in to the government as of last month.

In response, Chen said CPC's profits came from exporting oil products and exploiting oil resources from overseas, not from the domestic market.

"Oil prices should be determined by the market ? we'll keep an eye on the fluctuations and propose measures to prevent the increases from affecting the economy," Chen said.

Last month the nation's wholesale product index saw its biggest increase, of 11.43 percent year-on-year, since May 1981, which was attributed to higher international costs for oil, coal and other energy sources, the Directorate General of Budget, Accounting and Statistics said.

Nevertheless, Chen said due to competition among retailers, consumer prices only rose by 1.54 percent for the first nine months of the year, which is relatively low compared to 2.5 percent in the US, 2.7 percent in the UK, 3.6 percent in South Korea and 1.6 percent in Singapore.