Newspaper article China Post

Taipower, CPC Chiefs Fuel Outrage of a Cheated Public

Newspaper article China Post

Taipower, CPC Chiefs Fuel Outrage of a Cheated Public

Article excerpt

The cost of living has been rising in Taiwan since President Ma Ying-jeou was re-elected on Jan. 14. People are mad at the rising prices, though inflation isn't alarming. Why?

First and foremost, they feel they have been cheated. President Ma's administration had continued the price freeze on gasoline and fuel and didn't allow the government-owned Taiwan Power Co. (Taipower) to raise power rates before his re-election. As the world's crude oil prices kept on rising, petroleum prices as well as power rates should have risen, but the government kept them low lest Ma should be defeated by Tsai Ing-wen of the Democratic Progressive Party. Had the gas and fuel prices and power rates been raised, prices of all other things would have risen and the chances of his re-election would have taken a severe hit. If the presidential election were held now, Ma couldn't win a second term. That's the reason why his popularity after the poll and before his second inauguration has plummeted to a record low.

People feel they have been cheated, again, and are mad, of course, after finding out that state-owned CPC Corp. has lost NT$30 billion (US$1 billion) over the past couple of years amid the skyrocketing of crude prices while the private oil company of Formosa Plastics Group has made exactly the same amount of money in net profit. The man on the street simply cannot understand why the Formosa Petrochemical Corporation's chain of stores, set up to break the monopoly of CPC, is earning as much as the latter is losing. Nor can he forgive the government for raising the prices at the pump to make the private company earn more.

Let's take a look at how the two companies operate. When the government allowed the Formosa Plastics Group, owned by Wang Yung-ching of "god of management" fame, to operate in competition with CPC, the estimated profit margin was 10 percent. That means the government-run company could operate to earn at least the same percentage of net profit. …

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