CPC, Taipower profits may rise by NT$110 bil.

By Camaron Kao ,The China Post

The Ministry of Economic Affairs (MOEA) yesterday proposed a five-year plan to boost profits of struggling CPC Corp. (CPC, 台灣中油公司) and Taiwan Power Company (Taipower, 台灣電力公司) by a combined total of NT$110 billion from 2011 levels. The plan was part of a report detailing the findings of five committee meetings held over the past three months looking at ways to improve the state-run firms’ performances. Economic Minister Shih Yen-shiang (施顏祥) said the report will serve as a basis for future reforms, describing it as a “promise” and saying that reviews and supervision of the two companies” will continue. Taipower would increase profits by NT$50 billion under the plan, taking measures such as revitalizing land assets — expected to increase revenue by NT$4.2 billion by 2016 — and canceling cheaper electricity benefits for its employees — expected to reduce costs by NT$121 million over the next five years. The Taipower plan would see NT$6.2 billion more in revenue and NT$43.8 billion in expenditure reductions. The reductions would include measures like renegotiating contracts with independent power producers (IPPs) and combined heat and power plants, reducing the bonuses of part-time drivers, and decreasing the use of company cars. The NT$50 billion in new revenue did not include savings made in coal procurement. The report also proposes utilizing the 20-percent option stipulated in Taipower’s coal contracts to allow the purchase of coal directly from the market when prices are low, saving an estimated NT$5 billion annually until 2016. The proposal would see CPC increase profit by NT$61 billion in part by reviewing its land assets, including leasing one of its buildings in Taipei’s Xinyi District which was criticized by Hon Hai Precision Co. Chairman Terry Gou as “unnecessary.” The company would save NT$135 million by reducing product discounts for CPC employees. Renegotiation Pending for Arbitration: Taipower Chief According to Taipower Chairman Huang Chung-chiou (黃重球), the firm has negotiated with four IPPs to revise their contracts, but these four private companies are not willing to make any changes. Huang said Taipower has submitted the case to the Bureau of Energy for arbitration. Personnel Reform, Reduction of Bonuses for Senior Managers

State-owned Enterprise Commission Chief Executive Director Liu Ming-chung (劉明忠) said yesterday that Taipower’s chairman and CPC’s chairman, president and vice president would not receives any bonuses if their company suffers a loss over the next five years.

The salaries of high-ranking managers in the loss-making company would also not be adjusted. Any personal losses would be compensated for after the companies turn a profit. By 2016, CPC plans to replace 2,400 people, reducing average age of its employees from 50.6 to 49.5, saving NT$3.4 billion by paying lower salaries. Taipower would also replace 4,000 people in the next five years, reducing the average age of its employees from 49.3 to 48. Some NT$6 billion would be saved as a result.