China Credit Rating believes that Taipower will lose about 200 billion yuan this year.

(Schematic diagram, photo provided by Taipower)

[Reporter Wu Xintian/Taipei Report] China Credit Rating released a rating report today, directly pointing out that the electricity price raised by Taiwan Power Company is still lower than the cost, the loss this year may reach 200 billion, and the loan will also exceed 1.4 trillion.

On March 17, the government announced that the average electricity price would be raised to 3.1154 yuan, an increase of 11%, effective from April 1.

In addition, the government previously announced a plan to increase the capital of Taipower by 200 billion yuan this year.

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However, China Credit Rating pointed out that the adjusted electricity price is still lower than Taipower’s service cost of 4.4054 per kilowatt-hour in January 2023. It also bluntly stated that although the electricity fee increase and cash capital increase should slow down the increase in Taipower’s borrowing leverage. Still not enough to cover operating needs and major capital expenditures without increasing borrowing.

Because Taipower's operating costs are still relatively high, and Taiwan's power structure is transitioning to renewable energy, it needs to continue to invest in relatively high capital expenditures.

Taipower's pre-tax loss in January 2023 is 32.1 billion yuan.

China Credit Rating estimates that if the fuel cost in 2023 remains the same as in 2022, after taking into account the increase in electricity charges, Taipower's pre-tax loss in 2023 will be between 190 billion yuan and 200 billion yuan.

China Credit Rating further predicts that Taipower's borrowings at the end of 2023 may increase from about 1.2 trillion yuan at the end of June last year to between 1.4 trillion yuan and 1.43 trillion yuan.

In addition, China Credit Rating believes that the procurement of renewable energy with higher power purchase costs will increase at a faster rate in the next 1 to 2 years; if the cost of fossil fuels does not decrease significantly, expenditures related to renewable energy may also make Taipower 2024 Borrowing increases further through 2025.

Nevertheless, as Taiwan's only power distribution service provider and supplying most of the country's electricity, China Credit Rating believes that Taipower will continue to play a key role in implementing government power policies and realizing Taiwan's social and economic policies.

Therefore, even if Taipower's profitability does not improve significantly, the government will provide additional cash capital increase and further increase electricity prices to improve Taipower's capital base and financial status.

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