Taiwan Power Co (Taipower, 台電), the nation’s only power distributor, posted a net loss of NT$23.25 billion (US$762 million) last year as a result of the soaring cost of international energy resources, Taipower chairman Edward Chen (陳貴明) said on Friday.
“Last year the company spent a total of NT$4.46 trillion, NT$31.25 billion higher than our total revenues of NT$4.15 trillion,” Chen said at a shareholders meeting where he announced the state-run company’s annual results.
“The NT$31.25 billion deficit marked a huge increase — NT$28.42 billion — over the deficit of NT$2.81 billion in 2006,” he said.
A tax break of NT$7.98 billion helped trim the company’s net loss last year to NT$23.26 billion, he said.
Chen attributed the company’s woes to soaring international oil and coal prices. The company’s electricity prices did not reflect this rise in costs as they were frozen under the former Democratic Progressive Party administration since July 2006.
Rapidly rising oil and coal prices took an especially high toll on the company in the first five months of this year. Taipower posted a pre-tax loss of NT$47.9 billion, compared with NT$15.5 billion for the same period last year.
International prices of crude oil and coal have risen by 46 percent and 50 percent respectively since January. Crude oil has hit US$130.62 a barrel and coal US$150 per tonne.
The two fuels provided half of the company’s electricity in 2006.
A 5.8 percent increase in electricity prices in July 2006 was the first hike in 23 years. The company has since repeatedly appealed for more hikes.
The Chinese Nationalist Party (KMT) administration has agreed to a 12.6 percent hike in electricity prices starting next month and a 12.6 percent increase on Oct. 1 to reflect the higher cost of raw materials.
“The company is also working on ways to boost operational efficiency with measures such as cutting the procurement price of fuels,” Chen said.
Chen said Taipower would not be able to construct new power-generating facilities if it continued to run a deficit.
“The problem will also hurt the company’s capital position,” he told shareholders.
To make up for its losses, Taipower said it had used its NT$1.99 billion legal surplus, earned in previous years, and NT$21.26 billion in legal reserves.
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