Reforms undertaken by Taiwan Power Co (Taipower, 台電) and CPC Corp, Taiwan (CPC, 台灣中油) are expected to increase income by NT$111 billion (US$3.72 billion) over the next five years, according to a task force report released yesterday.
The two state-run companies will also aim to lower procurement costs by NT$37.1 billion and save NT$237.9 billion by scaling down investment projects and reducing inventory during that time, the task force organized by the Ministry of Economic Affairs said in the report.
The task force was created following strong criticism by the public of the two companies’ management after both announced they would raise fuel and electricity prices in April.
“Every plan in the report represents a promise by the Ministry of Economic Affairs, Taipower and CPC to improve, and we will do our best to achieve every goal we set in the report,” Minister of Economic Affairs Shih Yen-shiang (施顏祥) said at a press conference yesterday.
There are still many areas the task force did not have time to delve into, Shih said, adding that it would continue its work.
Based on the report, Taipower plans to increase its income by NT$6.2 billion and cut costs by NT$43.8 billion over the next five years, while CPC plans to earn an additional NT$44.2 billion and save NT$16.8 billion in costs.
To achieve those goals, Taipower will increase the utilization of its real-estate assets to bring in an additional NT$4.2 billion and enhance the efficiency of its project with Bengalla Mining Co in Australia to bring in an additional NT$1.9 billion, according to the report.
CPC will also push for more utilization of its real-estate assets, including leasing out its headquarters building in Taipei, which will bring an extra NT$14 billion to the refiner.
The company’s plans to increase oil exploration are expected to generate NT$12.1 billion, while its efforts to enhance production and marketing efficiency are expected to bring in an additional NT$11.2 billion, according to the report.
To reduce costs, Taipower plans to reduce its purchases of electricity from individual power suppliers and increase its use of power generated by renewable energy sources to replace high-cost fuel power generation, while CPC plans to reduce its personnel and office expenses.
In term of scaling down investment projects, Taipower aims to slow down the renovation of its Shen-ao power plant in New Taipei City (新北市) and its Changbin plant project and land reclamation project in central Taiwan.
CPC, for its part, will defer its third hydro-desulphurization plant project in Taoyuan, its development of the F Structure field off of Kaohsiung and reduce its Jatropha curcas biofuel and Global Energy Maritime Co (環能海運) investment transfer projects.
Meanwhile, CPC will gradually go public and plans to submit a privatization proposal to the authorities in 2014, Shih said.
According to the plan, CPC is to revise its privatization proposal, select a financial consultant and study the feasibility of outsourcing its oil refinery and gas distribution while retaining its oil exploration operations, by the end of June next year,
However, Shih said that the company’s labor union had already said it opposed CPC’s privatization, and said the company would do its utmost to reach an agreement.