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Taiwan Power investment plan meets opposition

Legislators yesterday expressed opposition to Taiwan Power Co’s (Taipower, 台電) planned investment in the Patuca hydroelectric power plant in Honduras, saying that investment will further expand the state-run utility company’s losses.

While Taipower was appointed by the government to take part in the investment project in a bid to strengthen diplomatic ties between Taiwan and Honduras, lawmakers demanded the company make a confidential report to a legislative committee regarding the investment.

Taipower’s finances have been weakened by a government freeze on electricity rates.

Taipower estimated that the plant’s total construction costs are estimated at US$345.89 million, but legislators said the company would have to borrow funds in order to invest in the project due to its lack of cash, with the result that taxpayers will have to pay the company’s heavy interest payments.

Taipower passed the NT$345.88 million (US$11.57 million) investment plan in an internal meeting on March 5 and the plan will begin this year, with the Ministry of Foreign Affairs (MOFA) initially footing the bill, legislators said.

As Taipower has not appropriated funds for the investment project and legislators were unable to screen the budgets, they had asked for a closed-door report by Taipower.

Taipower chairman Edward Chen (陳貴明) said recently that the Ministry of Foreign Affairs will be responsible for any losses in the company’s investment plan.

The investment plan forms part of a package of foreign aid that President Chen Shui-bian (陳水扁) promised several Central American countries during a trip he made there last August.

Taipower expects its pretax loss this year to widen to NT$44.61 billion (US$1.47 billion) from NT$31.24 billion last year, on higher costs and a possible continued freeze on electricity prices, the Dow Jones Newswire quoted spokeswoman Tu Yueh-yuan (杜悅元) as saying yesterday.

The state-run electricity supplier expects revenues this year to rise to NT$443.84 billion from NT$408.74 billion last year, Tu told Dow Jones.

In order to break even this year, the company needs to hike rates by an average of 50 percent.

Edward Chen said yesterday that the company would raise its prices on July 1 at the earliest, which will be one month after the state-run CPC Corp, Taiwan (CPC, 台灣中油) adjusts its fuel prices.

The nation’s electricity prices were on average NT$2.15 per kilowatt-hour last year.

Prices would go up to NT$2.8 per kilowatt-hour after July 1.
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