Sat, Feb 19, 2005 - Page 10 News List

Legislators demand changes to Power Industry Law

PRIVATIZATION Lawmakers have blocked the government's plans to sell shares in Taipower by insisting that the nation's 40-year-old-electricity law be revised first

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The government will delay selling shares in Taiwan Power Co (Taipower, 台電), the nation's biggest power producer, because lawmakers demand that 40-year-old electricity legislation be changed first.

"We won't achieve our goal to privatize Taipower by the end of this year," Wu Kuo-tong (吳國棟), deputy chairman of the Enterprise Commission, said in an interview in Taipei today.

"We can't do it before revisions to the Power Industry Law (電業法) are passed," Wu said.

The government, which owns 97 percent of Taipower, planned to cut its stake to less than half by the end of this year. The delay is a blow to the government's plans to plug a budget deficit projected to reach a record NT$337.3 billion (US$10.6 billion) this year partly by selling assets, according to Taiwan Research Institute vice president Wu Tsai-Yi (吳再益).

"The government won't be able to make ends meet," Wu said. "It will have to issue more bonds than last year."

Taiwan sold bonds worth NT$465 billion last year, when the deficit was an estimated NT$304 billion, and plans to sell between NT$400 billion and NT$500 billion this year, Liu Teng-cheng (劉燈城), director of the finance ministry's Department of national Treasury, said on Jan. 18.

Taipower, which generates about 70 percent of the nation's electricity and is its only power distributor, has capital of NT$330 billion, making a sale of its shares potentially one of Taiwan's largest ever. The market value of the utility's assets exceeds NT$1 trillion, equivalent to about 10 percent of the nation's GDP, according to Wu.

The planned sale would be the government's largest since it raised US$874 million in Chunghwa Telecom Co's (中華電信) initial share sale during 2000. Chunghwa Telecom is the nation's biggest phone company.

The year-end target date already reflected a delay from a previous objective of June 2001. Lawmakers have blocked the plan by insisting that the nation's 40-year-old-electricity law be revised and that the legislature first approve the Taipower share sale.

"If the electricity bill is passed this year, maybe Taipower can be privatized two years later," said Wu, 63, who has been in his post for a month.

Taiwan's current electricity law was enacted when Taipower was the nation's only power company. The government has since allowed private power producers, which generated about 30 percent of the nation's electricity in December.

Taiwan's main political parties haven't agreed on whether new laws should further open the electricity market, allowing private companies to own electricity transmission and distribution networks, Yeh Huey-ching (葉惠青), director-general of the Bureau of Energy, said on Dec. 27.

Reduced government ownership of Taipower would give the utility greater independence, he said. As a state-owned company, Taipower's budget and major spending plans must be approved by the Cabinet and the legislature.

Because of government opposition, Taipower hasn't raised electricity fees since 1983. The company may post a record loss of NT$16 billion this year if it doesn't raise prices, according to Lee Chuan-lai (李傳來), a spokesman for the utility.

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