Sat, Dec 23, 2006 - Page 11 News List

Taipower to borrow more to cope with annual loss

FIRST TIMER The nation's largest electricity generator is expected to report an annual loss for the first time, to the tune of NT$3.24 billion in the first 11 months of this year

BLOOMBERG

Taiwan Power Co (Taipower, 台電), the nation's biggest electricity generator, plans to borrow 25 percent more money next year because of widening losses.

The state-run utility expects borrowing, which includes bonds and bank loans, to reach NT$138 billion (US$4.2 billion) next year.

The utility estimated a total of NT$110 billion in borrowed money this year, company finance director Walter Pan said yesterday.

The company is borrowing more money to fund the construction of power plants and upgrade its grid as rising fuel costs and government controls on electricity prices have caused losses.

The utility expects to report its first annual loss this year.

"It'll be worse next year as fuel prices are rising," said Lee Chuan-lai (李傳來), a Taipower media relations officer.

The Taipei-based company expects to lose money again this month after posting a loss of NT$3.24 billion in the first 11 months of the year, he said.

Taipower may report a loss of NT$33.5 billion next year, according to the Cabinet's draft budget for next year sent to the parliament in August.

Investment in power plants, grids and equipment may amount to NT$144 billion next year, and were expected to total more than NT$140 billion for this year, according to the budget.

The government owns 97 percent of the utility, which generates about 75 percent of the electricity the nation uses and monopolizes transmission in Taiwan. The company needs government approval for increases in tariffs.

Taipower raised prices by an average of 5.8 percent in July -- the first increase in 23 years -- but had to obtain permission for the raise from the Ministry of Economic Affairs.

The cost of importing liquefied natural gas surged 23 percent from a year earlier in the first 10 months of the year, according to the energy bureau.

Gas-fired generators made up 31 percent of the country's installed capacity last year, trailing coal's 33 percent, according to the energy bureau's Web site.

Liquefied natural gas accounts for more than 90 percent of the nation's gas demand.

Special technology is used to cool natural gas to its liquid form so that it can be transported by vessels over long distances to markets that aren't connected by pipelines.

GAS PRICE INCREASE

State-run Chinese Petroleum Corp (CPC, 中油) increased its domestic natural gas prices by an average of 2.99 percent, citing rising import costs as the reason behind the increase.

The increase, which took effect yesterday, affects factories, users and power plants.

Municipal gas utilities would also be affected, the Taipei-based refiner announced in a press statement.

Today's increase, the first in four months, takes the price of the fuel processed from imported liquefied natural gas to NT$14.9359 per cubic meter for industrial users and NT$13.92 for city gas companies, CPC said.

CPC is the country's only natural gas supplier.

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