Taiwan Power to be split up prior to privatization

State-run Taiwan Power Co (Taipower, 台電) will be broken into units as a first step before the government sells shares in the business, Minister of Economics Steve Chen (陳瑞隆) said.

The company may be divided into "distribution, power generation, and maybe nuclear," Chen said in an interview on May 11, without giving details such as a timetable.

"That is the first question that will be looked into," he said.

Taiwan's government requires the approval of the opposition Chinese Nationalist Party (KMT), which controls the legislature, to sell down its 97 percent stake in the utility, and has missed two previous sales targets.

Selling shares in state companies would help plug the budget deficit, projected to reach NT$217.1 billion (US$6.5 billion) this year.

The sale plans are "already 10 years late," Sophia Cheng (程淑芬), head of Taiwan research at Merrill Lynch & Co said in an interview. "Taiwan needs to accelerate asset sales and privatization."

The government also wants to sell more than 51 percent of shipbuilder CSBC Corp, Taiwan (台灣國際造船) this year or next, Minister Chen said May 11.

Taipower, which generates about 75 percent of the country's electricity and is its only power distributor, has capital of NT$330 billion, 28 percent more than that of Taiwan Semiconductor Manufacturing Co (台積電), the biggest company by market value on the stock exchange.

The utility's assets are estimated at NT$1.35 trillion, according to the company's Web site. That's equivalent to about 12 percent of the country's gross domestic product.

The government's plans to sell state-owned businesses have been delayed by accusations from KMT that the assets are being sold too cheaply, and by protests from labor unions.

Chen said the ministry will discuss the plans to split up and sell Taipower with the company's workers.

CSBC, the country's largest shipyard with capital of NT$11 billion, has already attracted interest from foreign companies, Chen said, declining to identify them.

Kaohsiung-headquartered CSBC, 99 percent owned by the government, has two shipyards and produces about 2 percent of the world's ships by tonnage, according to the prospectus issued to potential investors.

The company's net income this year may almost triple to NT$1 billion, from a forecast NT$339 million last year, according to this year's draft budget bill. The shipyard had been unprofitable until 2001, when it fired 47 percent of its workers.

Taiwan's economy, Asia's fifth largest, may expand 4.6 percent this year, faster than the government previously predicted, Chen said.

Growth of 4.3 percent for this year was predicted by the state statistics bureau on Feb. 15, after the country expanded 4.62 percent last year.

The higher estimate stems partly from a target of 12 percent export growth based on stronger promotion of exports and brand-product sales, Chen said in the interview.

The Directorate General of Budget, Accounting and Statistics (DGBAS) had forecast a 6.2 percent growth in exports for the year, less than half of last year's 12.9 percent. The country's exports grew 7.7 percent in the first four months, according to the Ministry of Finance.

The government wants gross domestic product to rise an average 5 percent between this year and 2015 after growing about 4 percent on average between 2000 and last year, said David Hong (洪德生), president of the Taiwan Institute of Economic Research (台經院).