Taiwan is to buy at least 1.2 million tonnes of coal from China this year to diversify its sources of supply and lower power generation costs, power officials said yesterday.
The state monopoly Taiwan Power Co (Taipower, 台電) has signed two one-year contracts for spot purchases with Chinese authorities, a Taipower official said.
"To lower costs, we need to expand coal imports from China where prices are relatively competitive compared to most other sources," the official said.
He refused to reveal the actual import prices.
Taipower was authorized to buy spot coal from China four years ago, but the annual import volume had been less than one percent of the company's total imports, she said.
This year the monopoly was given approval from the economic ministry to purchase up to 4.4 million tonnes of coal from China, or 20 percent of Taipower's total imports this year, she said.
Due to the sensitivity of cross-strait relations, the import limit on Chinese coal was lower than the 35 percent cap for other supplying countries, she added.
Taipower imports 22 million tonnes of coal a year, mostly from Indonesia, Australia and South Africa.
But the official did not rule out the possibility of widening imports from China in the future.
"The Chinese coal may become even more competitive once Taiwan opens full direct links with China," he said.
The prospect of the opening of direct links has been in the media recently in the wake of last weekend's Economic Development Advisory Conference.
Taipower has recently marked down this year's profit target to 18 billion Taiwan dollars (US$520.2 million) from 26 billion dollars due to sharp hikes in fuel import costs.
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