Preferential electricity prices for staff of state-run Taiwan Power Co (Taipower, 台電) are to be canceled and about 350 employees are to be laid off this year, a government official said yesterday.
The Ministry of Economic Affairs instructed Taipower to review its operations and personnel after the loss-making firm’s proposal to raise utility prices drew public criticism, Liou Ming-joung (劉明忠), executive director of the state-owned Enterprise Commission, told a press conference hosted by Chinese Nationalist Party (KMT) lawmakers.
Aside from demanding that state-owned firms cut their operational overheads by at least 10 percent this year, the ministry has told Taipower and oil refiner CPC Corp, Taiwan (CPC, 台灣中油) to lower their purchasing costs for raw materials and to review their welfare benefits and unused property, Liou said.
Taipower president Lee Han-shen (李漢申) said the company has proposed laying off about 350 people, canceling the preferential electricity tariffs offered to its employees and a reduction of about NT$5 billion (US$169 million) in its procurement costs this year.
CPC vice president Chen Ming-hui (陳明輝) said his company has been in consultations with its labor union regarding preferential policies offered to employees and other employee benefits and that it would soon make the plans public.
CPC plans to cut crude oil procurement costs by NT$2 billion, he added.
KMT caucus whip Hsu Yao-chang (徐耀昌) said his party supports the policy to rationalize prices, which he said have long been kept at unreasonably low levels.
“The government has acted in a responsible way to right the wrong, and we hope that people can come together to make it through these hard times,” Hsu said.
Another KMT lawmaker, Wu Yu-sheng (吳育昇), blamed the former Democratic Progressive Party (DPP) administration for causing the problem because the DPP adopted excessive price-freezing measures when in power from 2000 to 2008.
The DPP and the Taiwan Solidarity Union (TSU) caucuses reiterated their opposition to the price rises.
In a statement released yesterday morning, DPP Legislator Pan Men-an (潘孟安) said his caucus opposed the KMT government’s “ambush” on the public with its announcement of new pricing structures for fuel and electricity, insisting that it is not the right time to raise prices given that the economic outlook remains grim.
The caucus asked the ministry to remove entry barriers to the nation’s fuel market, to implement fuel and electricity market liberalization, reform state-run companies and promote the privatization of those companies.
It also demanded that Taipower lower its reserve margin from as high as 23.4 percent in 2010 to below 15 percent to avoid waste.
“We also urge Taipower and CPC Corp to review their pricing formulas by including the Misery Index in their calculations, and the pricing adjustment process should be transparent,” Pan said.
By including the Misery Index, the sum of the unemployment rate and the inflation rate, in the calculation, Taiwanese would be able to enjoy “fair and reasonable” electricity and fuel prices, he said.
Pan said the DPP and the public would not oppose price increases if they were deemed necessary, but Taipower and CPC Corp had failed to convince the public on the urgency of the price increases, managing only to highlight their own operational inefficiency and the opaque approach to their cost structures and fuel purchasing budgets.