Taipower could face bankruptcy if nuclear plant scrapped

04/26/2014 07:02 PM
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Taipei, April 26 (CNA) If the fourth nuclear power plant is scrapped due to widespread opposition, the state-owned Taiwan Power Co. (Taipower) will run into operating difficulties and could face bankruptcy, a Taipower spokesman said Saturday.

Roger Lee said that according to accounting regulations, only expenses that bring in revenue can be listed as assets. If the nearly completed plant is scrapped, it will not be possible for it to run and provide electricity, and the money spent will be listed as a one-time loss.

Lee said that the total budget for the plant is NT$283.8 billion (US$9.37 billion), NT$270 billion of which has been executed but has yet to be listed in the company's financial statements.

This, coupled with the company's accumulated losses of NT$208.4 billion as of the end of 2013, will mean that the total losses will have surpassed the company's paid-in capital of NT$330 billion. Under the terms of the Accounting Act, the company will face the crisis of bankruptcy.

Article 211 of the Company Act stipulates that "in case the assets of a company are insufficient to set off its liabilities, the board of directors shall apply to the court for pronouncement of bankruptcy." He said that the scrapping of the nuclear power plant would have a major impact on the company's financial situation and trigger a domino effect.

Not only will the company have its credit rating adjusted downwards, it will face tightened liquidity by the banks, he said.

If the company has a cash flow problem, contractors and suppliers could suspend their work and the company could also have difficulty purchasing fuel needed to operate its existing power plants, which could affect normal electricity supplies, he said.

(By Lin Meng-ju and Lilian Wu)ENDITEM/J

Related stories:●April 26: DPP leader warns of 'unrest' over nuclear dispute●April 25: President, DPP head fail to find common ground on nuclear issue●April 22: Ex-DPP chief begins fast to push for scrapping of nuclear plant●April 21: Premier, DPP head fail to reach consensus over nuclear plant

(Click here for stories before the debate on nuclear power was recently rekindled.)

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