Key facts
- Taiwan will allocate $13 billion to support state energy companies Taipower and CPC.
- The funds are intended to offset sharp cost inflation from the war in the Middle East.
- Taiwan is among the most import-dependent Asian nations, sourcing 94%-97% of its energy needs from overseas.
- Semiconductor manufacturer TSMC consumes 8% of Taiwan's electricity.
Taiwan is allocating the equivalent of $13 billion to support its state power generation company Taipower and refiner CPC, Reuters reported, in an effort to shield consumers from rising energy costs exacerbated by the conflict in the Middle East. The government is already subsidizing energy prices for consumers, a move distinct from other nations that have passed increased costs onto businesses and households. Taiwan's economy ministry highlighted the particular strain on CPC, stating the company cannot absorb the difference between adjusted and non-adjusted oil and gas prices. Without supplementary budgets, both companies may struggle to maintain price stability, potentially leading to market volatility.
Asian nations, including Taiwan, are heavily reliant on energy imports from the Middle East, making them particularly vulnerable to price hikes. Taiwan imports between 94% and 97% of its energy consumption. Natural gas, sourced from Qatar and the UAE, accounts for over 23% of its power generation, with oil contributing another 36% and coal nearly 32%. The island's status as a major electronics manufacturer, with TSMC alone consuming 8% of its electricity, further intensifies its demand for power. While increased LNG imports from the U.S. have mitigated shortage risks, their high cost necessitates partial offsetting to maintain industrial competitiveness.