Government plans NT$415 billion energy spending package amid global price surge
NT$180.9 billion would cover the gap from energy price adjustments, while CPC Corp. Taiwan would receive NT$233.8 billion to strengthen its finances
The government said on Oct. 1 that it plans to allocate an additional NT$415 billion (about US$13 billion) this year to help Taiwan Power Co. (Taipower) and CPC Corp. Taiwan absorb the cost pressures caused by a sharp rise in global energy prices.
The Ministry of Economic Affairs said after a Cabinet meeting that the energy budget approved last year was no longer sufficient to cope with this year’s higher prices, which have been affected by turmoil in the Middle East. It has therefore proposed a supplementary budget.
Under the plan, about NT$180.9 billion would be allocated to Taipower, CPC and other energy suppliers to cover the gap between the costs before and after energy price adjustments. The government also plans to inject NT$233.8 billion in capital into CPC to improve the company’s financial structure.
The government has long used energy pricing mechanisms and subsidies to prevent rapid increases in international energy costs from being passed on to domestic consumers. The ministry said the policy has helped reduce the impact of energy price fluctuations on inflation.
CPC, however, is currently under considerable financial pressure. The ministry said that under the existing oil and gas price adjustment mechanism, the company has been unable to fully absorb the gap between adjusted and unadjusted prices, with its accumulated losses expected to exceed NT$127.6 billion.
The ministry warned that if CPC’s financial condition continues to deteriorate, it could face the risk of a downgrade in its international credit ratings and could also lose bargaining power in international energy procurement.
The ministry said that without the supplementary budget, Taipower and CPC could struggle to continue playing their role in stabilizing energy prices, potentially increasing price volatility.
The government is therefore calling on the Legislative Yuan to support the proposed spending, saying that maintaining stable energy prices and ensuring a reliable supply of natural gas are highly urgent priorities.
The scale of the plan also highlights the pressure that rising global energy prices are placing on Taiwan’s energy system and the finances of state-owned energy companies. The government’s current policy focus is to limit the extent to which higher international energy costs are rapidly passed on to the domestic market while maintaining stable energy supplies.