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September 23, 2017

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CPC should be privatized: committee

By Camaron Kao--The fourth meeting of the committee to improve the efficiency of government-run firms agreed yesterday that CPC Corp. (台灣中油公司) should eliminate its gas and mining division and then undergo privatization, according to State-owned Enterprise Commission CEO Liu Ming-chung (劉明忠).

As the CPC is the country's sole gas provider, committee members deemed it necessary for the firm to cut its gas division before going private in order to ensure a reliable supply of gas for Taiwan, Liu said.

Furthermore, the costs of mining in terms of time and money are huge and therefore CPC will turn private after relinquishing its mining division, which may affect the country's energy supply, according to Liu.

The CEO said that CPC spent NT$75 billion in 2011 carrying out government policies. To cut costs, CPC will not be responsible for some of these policies in the future.

Power Reserve to be Reduced to 15%

The committee also called for the government to reduce the mandated power reserve from 16 percent to 15 percent. "The global economic condition is dire, which means Taiwan does not need such a large power reserve," Liu said.

In the future, Taiwan Power Co. (Taipower, 台灣電力公司) will adjust the power reserve amount every year as circumstances require, the commission CEO said.

Taipower will establish a committee to review electricity rates as well as discount amounts and qualification criteria, according to Liu.

Committee members also urged the sole electricity supplier to make explicit the relationship between its losses and its obligation to carry out certain policies for the government. Taipower agreed to in the future disclose the amount of money spent enforcing government policies.

According to Liu, Taipower bore NT$103.7 billion of losses in 2011 because of implementing certain policies for the government.

Among these, buying products such as switches and electric cables locally to give a hand to Taiwan companies has cost Taipower NT$30 billion annually, the CEO said.

Committee members ruled that for companies that are "competitive enough," the government should waive the restriction for the sole power supplier to purchase such products locally. For other companies, the government should set a timetable to phase out these regulations.

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