Formosa Corp to be notified of higher fines

PAY UP::The Changhua County Government has uncovered archived coal usage statistics showing Formosa Corp’s alleged illegal gains from operating boiler units

By Chang Tsung-chiu and Jake Chung  /  Staff reporter, with staff writer

Sat, Oct 07, 2017 - Page 3

The Changhua County Government on Thursday said it would be mailing an official notice to Formosa Chemicals & Fibre Corp regarding increased fines for alleged profiteering, bringing the fine total to NT$1.24 billion (US$40.82 million).

Formosa Corp was forced to temporarily close its Changhua branch after the Changhua County Government’s Environmental Protection Bureau rejected its application to renew the operation permits of the site’s three boiler units, citing that the company had failed to meet standards agreed to in a previous environmental assessment.

Of the three boilers, the M22 boiler unit was the one that failed to meet environmental assessment standards, while the bureau said the company’s requests for the M17 and M16 units were incorrect, as it should have filed for “changes” to the permits rather than a “renewal.”

The county government said its fines were not only because the company had failed to meet environmental assessment standards, but also because Formosa Corp had allegedly been selling power to Taiwan Power Co (Taipower) facilities.

However, the company’s boilers were operating under a concept called “cogeneration,” meaning that the company would produce a portion of the electricity used for operations by burning waste and would then sell electricity from any excess power production to local facilities.

Actuaries at the county government showed that it had calculated the exact amount of electricity generated by the M22 unit in the nine years since it began operation in 2008.

Initial assessments for alleged illegal gains made by operating the M22 unit were based on power generated by the boiler unit between 2011 and September last year, which the bureau estimated to be about NT$1.2 billion.

However, the bureau found archived coal usage statistics on Thursday for power generated by the M22 unit between 2008 and 2011, the bureau said, adding that it had calculated that the M22 unit alone generated 4.8 billion units of electricity, with one unit of electricity being defined as 1kW/h.

The bureau had applied the lowest price per unit of power — NT$1.92 — and concluded that Formosa Corp’s net gain from power generation was 17 percent of its total income, it said, adding that the company’s illegal gains would stand at NT$1.24 billion, as it paid 5 percent in pay-as-you-go income tax and 17 percent in annual income tax.

The bureau said it would offer Formosa Corp the opportunity to respond before the fine was implemented, saying that it would take the company’s statement that “its actions were not illegal” as a response.

The bureau would be mailing out the official notice on Wednesday, Bureau Director-General Jiang Pei-ken (江培根) said.