Thu, Sep 13, 2012 - Page 14 News List

Taipower books profit amid gloomy long-term outlook

By Kevin Chen  /  Staff reporter

State-run Taiwan Power Co (Taipower, 台電) said yesterday it swung into profit last month from the previous month, but still booked a loss of NT$74.2 billion (US$2.5 billion) in the first eight months of the year.

Despite the improvement in its bottom line last month, the company said it would still impose the second stage of electricity rate hikes in December, or see its accumulated losses continue to increase.

Taipower reported a profit of NT$3.9 billion last month, following losses of NT$6.3 billion in July and NT$9.74 billion in June, according to the company’s latest data, released yesterday at a press conference.

With a loss of NT$74.2 billion in the first eight months, the company’s accumulated losses have reached NT$192 billion as of the end of last month, according to Taipower.

Taipower chairman Hwang Jung-chiou (黃重球) told reporters that growing energy conservation awareness helped lower electricity consumption last month, which had in turn cut the company’s operating cost for coal-fired power generation.

Hwang was quoted by the Central News Agency (CNA) as saying that the company has estimated losses this year would reach NT$80 billion and accumulated losses would total more than NT$200 billion.

The Ministry of Economic Affairs said yesterday the government had no plan to suspend December electricity rate hikes, after some lawmakers recently called on the ministry to delay the increase in view of rising inflationary pressure.

The consumer price index (CPI) rose to a four-year high of 3.42 percent last month from a year ago, following a 2.46 percent increase in July, the the Directorate-General of Budget, Accounting and Statistics reported on Wednesday last week.

“If Taipower does not hike rates in December, its losses will exceed NT$81.0 billion next year, with accumulated losses reaching NT$291.7 billion,” cable TV network UBN yesterday quoted Minister of Economic Affairs Shih Yen-shiang (施顏祥) as saying.

Shih said the ministry would “seriously evaluate” the lawmakers’ suggestion.

Separately, Taipower yesterday said it had sold NT$10.3 billion in unsecured corporate bonds in two tranches via an auction on Monday.

The company said it auctioned NT$2.9 billion in seven-year bonds and NT$7.4 billion in 10-year debts. Proceeds from the sale will be used to finance future power generation needs, it said in a statement.

The latest auction was the company’s fourth bond sale this year after it sold NT$17.7 billion in bonds in June, NT$17.25 billion in April and NT$16 billion in March.

Taipower is the largest issuer of corporate bonds in the country and the yield on its bonds usually serves as a benchmark for the nation’s corporate bond market. It sold NT$91.7 billion in bonds last year and NT$89.2 billion in 2010, company data showed.

Based on the results of Monday’s auction, Taipower will pay a coupon rate of 1.31 percent on its seven-year bonds and 1.43 percent on its 10-year debts, which are lower than the yields of 1.39 percent and 1.49 percent it paid on previous sales of seven-year and 10-year bonds.

However, the rate of 1.43 percent on the company’s 10-year bonds was higher than the 1.19 percent yield yesterday on 10-year government bonds due in September 2022, GRETAI Securities Market data showed.

The newly sold bonds would be issued in the middle of next month, with Capital Securities Corp (群益金鼎證券) serving as the lead underwriter. Taipower will repay bondholders in a lump sum at maturity, the statement said.

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