Committee to review gas rates amid odd activity

By Lee Yu-hsin and Stacy Hsu  /  Staff reporter, with staff writer

Tue, Oct 30, 2012 - Page 3

The legislature’s Foreign and National Defense Committee is scheduled to review on Thursday the operations and rates of the natural gas companies in which the Veteran Affairs Council has invested, as rates of domestic natural gas have continued to rise, despite falling global natural gas prices.

Citing the Natural Gas Enterprise Law (天然氣事業法) promulgated by the Ministry of Economic Affairs last year, which stipulates that any shareholder in such a business can only receive a maximum 5 percent rate of return on their investment, Democratic Progressive Party (DPP) Legislator Lin Chia-lung (林佳龍) called into question 16 highly lucrative natural gas companies in which the council holds shares.

“These 16 companies have pretty much monopolized Taiwan’s natural gas market, with a market share of 57 percent and an investment return rate of 20.7 percent on the north side of the Jhuoshuei River (濁水溪) — the symbolic dividing line between north and south Taiwan,” Lin said.

“While on the south side of the Jhuoshuei River, those firms hold a substantial 97 percent of the market and have an investment return rate of about 12 percent. Both figures [return rates] surpass the stipulated level,” Lin said.

These 16 companies include Shin Lung Natural Gas Co, Shin Shin Natural Gas Co, Shin Chung Natural Gas Co, Shintao Natural Gas Co and Nan Jehn Natural Gas Co, among others.

Meanwhile, Taiwan Solidarity Union (TSU) Legislator Lin Chia-lung (林佳龍) referred to some of the chairmen of these companies as “super fat cats.”

“If one looks into the background of the chairmen of these 16 companies, the majority of them are retired high-ranking military officers who enjoy a monthly wage of between NT$120,000 [US$4,000] and NT$180,000,” Lin Chia-lung said.

Calling the country’s natural gas pricing mechanism “repugnant to common sense,” Lin Chia-lung said Taiwan’s natural gas prices have increased by 44 percent in the past five years, while global rates have dropped 52 percent.

“These companies have repeatedly attributed price increases in domestic natural gas to global fluctuations, while international prices are actually going down, instead of the other way around,” Lin Chia-lung said.

Lin Chia-lung said the government should conduct a full-fledged review into the country’s natural gas industry to uncover any malpractices or operational problems in the next two months, during which the rates of household liquefied petroleum gas and natural gas would be temporarily frozen as per a decision made by the legislature’s Economics Committee on Monday last week.

“The council should decrease the prices of these 16 companies, cut their rate of return [to 5 percent] as well as allow them to go public to advance their operational transparency,” she said.