The privatization of Taiwan’s state-owned power company Taipower is expected to begin in 1999. Completion is scheduled for 2001. The company, which has an installed capacity of 25 735 MW and is the fourteenth largest power company in the world, is expected to have a market value of $15 billion.

Investment bankers believe that between 50 per cent and 60 per cent of the company will be sold, a portion expected to raise at least $7.5 billion. Under a schedule released by the economics ministry, the government will sell ten per cent of its stake in 1999, another ten per cent in 2000 and between 31 per cent and 41 per cent in 2001.

Taipower is being advised by a consortium led by Jardine Fleming and including Goldman Sachs, Arthur Andersen, Grand Cathay Securities and the Taiwan Institute of Economic Research. According to the Taipower vice president, Richard Hsu, the company will initially be privatized as a single entity. Later, it will be divided into separate divisions handling transmission, distribution and generation.

Distribution of shares in the company will be carefully controlled. The government plans to allocate 30 per cent of the shares to Taiwan residents; qualifying citizens will be permitted to buy up to 5000 shares each. Depending on the domestic response, foreign investors will be permitted to take part in the sale of the second and later tranches. Up to 20 per cent of shares will also be set aside for Taipower employees at a discounted price.

Up to a further ten per cent of the shares could be sold to strategic investors – international energy companies with skills of value to the Taiwanese utility company.

Analysts believe that Taipower will become one of the leading blue chip stocks on the Taiwan stock exchange.