Energy firms announce cost cuts

Amid surging oil and energy prices, Taiwan Power Co (Taipower, 台電) and Chinese Petroleum Corp (CPC, 中油) yesterday announced further cost cutting plans, which will jointly save another NT$1.01 billion (US$30.42 million) for the two state-run enterprises.

The two companies unveiled the plans at a meeting held by the Ministry of Economic Affairs, which was also attended by industry professionals and academics.

Taipower reported a loss of NT$13.6 billion for the first half of this year, as the cost of imported coal has increased significantly over the last year.

To offset surging international energy prices, Taipower had previously set a target to cut costs of NT$7.3 billion and raised the number to NT$11.5 billion later. Pursuant to discussions with industry experts, the company yesterday revealed its intention to raise the cost-cutting target once again to NT$12.4 billion.

Taipower raised its electricity rates last month, which is estimated to increase revenue by NT$12 billion this year, company chairman Edward Chen (陳貴明) said at the meeting.

To ensure stable supply of electricity, Taiwan will need to push the percentage of base load power generation from the current 47 percent to 60 percent, Chen said.

But given the government's policy to reduce dependence on nuclear power, and environmental concerns about coal generation, "this target will be very difficult to achieve, unless the government makes a concession on nuclear policy," Wu Tsai-yi (吳再益), vice president of the Taiwan Research Institute (台綜院), said yesterday at the meeting.

CPC announced yesterday it will also raise its cost cutting target from NT$5.84 billion to NT$10.7 billion. The company reported a deficit of NT$21.6 billion for the first seven months of the year, despite the fact that it has raised the price of wholesale petroleum products three times since January.

CPC Chairman Pan Wenent (潘文炎) refused to reveal whether the company has another gasoline price hike in the pipeline, saying its goal is to have prices reflect market supply and demand. He said current prices in Taiwan are still lower than Japan, South Korea, Hong Kong and Singapore, and will remain that way.

The price of West Texas intermediate crude has soared to US$75 a barrel, up 80 percent from US$42 a barrel early last year, according to the ministry's latest international statistics.