Taiwan Power Co (Taipower,
The company plans to sell NT$5 billion (US$151 million) of five-year debt guaranteed by Taipei Fubon Bank (
Worsening earnings are pushing up funding costs for the state-run utility, which spends more than US$4 billion a year building power plants and upgrading its grid.
The company is required by regulators to seek a bank guarantee for bonds after average profit over the past three years fell below 150 percent of annual interest payments, Lou said by telephone. "Costs are higher because we have to pay the bank fees."
"Maybe the bonds will be more attractive because they're guaranteed," he said.
Taipower lost NT$2.89 billion last year, comparing with a net income of NT$1.94 billion posted in 2005 and NT$6.9 billion in 2004, according to the Taiwan Stock Exchange Web site.
The company is unable to pass on rising fuel costs to consumers because of government price controls. The company raised prices by about 5.8 percent in July, the first increase in 23 years after the Ministry of Economic Affairs gave its approval.
Taipower plans to sell a total NT$50 billion of bonds this year, Lou said.
Investment in power plants, grid and equipment may total NT$144 billion this year, more than about NT$140 billion for last year, according to the government's budget.