Taiwan warns of difficulties curbing energy prices without budget — Taipei Times
Taiwanese state-owned companies CPC Corp and Taiwan Power Co may find it more difficult to curb domestic energy prices if the Legislative Yuan does not approve a supplementary budget to cover rising energy costs. Chen Shu-tzu, minister of the Directorate-General of Budget, Accounting and Statistics, said this during a meeting of the parliament’s Finance Committee in Taipei, Taipei Times reports.
According to her, without additional state funding, CPC Corp’s total losses could reach NT$127.6 billion, or US$3.93 billion, by the end of the year. Taiwan Power Co’s accumulated losses since 2020 already stand at NT$371.2 billion, according to data from Taiwan’s Ministry of Economic Affairs.
Budget and recapitalization
The Cabinet proposed a supplementary budget of NT$607.6 billion, which provides subsidies for the two state-owned companies. If parliament does not approve the proposal by the end of the year, it will lapse.
Chen Shu-tzu noted that subsidies alone would not be sufficient to offset CPC Corp’s accumulated losses. Therefore, she said, the company’s planned recapitalization of NT$233.8 billion is necessary. CPC Corp’s paid-in capital amounts to about NT$130.1 billion, while projected losses without additional funding could almost entirely wipe it out.
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The deterioration of the company’s financial position, the official said, could make it more difficult to secure bank financing, weaken its creditworthiness and hinder crude oil purchases. This, in turn, could create risks to energy supplies and increase inflationary pressure.
Questions over the Alaska project
Lawmakers also asked whether funds from the planned capital increase could be directed toward CPC Corp’s investments in a liquefied natural gas project in Alaska. The company is negotiating to purchase 6 million tonnes of LNG annually, while potential investments could reach US$4.4 billion.
Deliveries could begin in 2032 if the project develops on schedule, but the details of the purchase and investment are still being coordinated. Chen Shu-tzu said that the proposed recapitalization includes funding for urgent and necessary gas infrastructure projects, while investments in the Alaska project have not yet been finalized.
Opposition parties, which hold a majority in the Legislative Yuan, are reluctant to support additional funding for CPC Corp and Taiwan Power Co because they disagree with the Democratic Progressive Party’s energy policy. It provides for a gradual phaseout of nuclear energy, the development of renewable sources and significant reliance on fossil fuels, particularly LNG. During the first eight months of the year, fossil fuels provided more than 85% of electricity generation in Taiwan.
