Thu, Sep 27, 2012 - Page 14 News List

Taipower to sue four IPPs after negotiations fail

By Kevin Chen  /  Staff reporter

State-run Taiwan Power Co (Taipower, 台電) said yesterday it would take legal action against four independent power producers (IPPs) after months of failed negotiations to change the terms of contracts.

Taipower said in a statement that its decision came after its latest round of negotiations with four IPPs — Kuo Kuang Power Co (國光), Star Energy Corp (星能), Sun Ba Power Corp (森霸) and Hsing-yuan Power Corp (星元) — broke down again, as the private firms still disagreed on revising the conditions for selling their electricity to Taipower.

FAMILY TIES

These four companies are reinvestment units of Taiwan Cogeneration Corp (台汽電), which is a Taipower subsidiary.

“The negotiations formally broke down today,” Taipower said in the statement. “We have decided to take legal action to solve the disputes.”

Taipower is likely to file lawsuits against the four IPPs in two weeks at the earliest. In the meantime, the company is planning to rename government-designated candidates to sit on these companies boards.

NEGATIVE PERCEPTION

Taipower chairman Hwang Jung-chiou (黃重球) said in May the company would renegotiate the terms of contracts in a bid to reverse the public’s negative sentiment toward the company and its generous purchasing contracts with the four firms.

To ease the public’s complaints about overly generous contracts, the state-run company has held several rounds of negotiations with the four firms since May.

Taipower’s statement said that during the negotiations, it asked IPPs to distribute 60 percent of the profits they generate to the people of Taiwan and keep the remaining 40 percent, if their return-on-assets-ratio exceeds 3 percent.

The company said it also offered other options to sweeten the deal, but the IPPs maintained their objections to Taipower’s proposal, saying that changes in the terms of contracts would need to be approved by their boards and shareholders.

Some IPPs had even threatened to seek commercial arbitration over the matter, which Taipower said it could not accept, according to the statement.

MEDIATOR PULLS OUT

The Ministry of Economic Affairs said it would stop playing a role in mediating the contract disputes between Taipower and the four IPPs, while respecting Taipower’s decision.

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