Amid fears of a looming constitutional and financial struggle the Taiwanese cabinet has called a halt to construction of the Lungmen T$170 billion (US$5.3 billion) advanced boiling water reactor plant, consisting of two 1350 MWe units – which is already one third completed. The decision follows a showdown between leaders of the ruling, antinuclear DPP (Democratic People’s Party) and the opposition, pronuclear Kuomintang (KMT) who control the legislature. KMT leader Lien Chan is reported to have forced the move by threatening to hold up indefinitely the 2001 national budget.

Although the project owner, state run Taiwan Power Co’s financial ratings had been compromised in September following poor results and fears over its ability to supply future needs, the first concrete signs after months of fierce debate in cabinet and in commmercial circles came in the second week of October when Taipower notified GE and Mitsubishi Heavy Industries Ltd to postpone shipments of nuclear reactor components and two turbine generators. This followed Economic minister Lin Hsin-i’s suggestion that the project should be scrapped because of public fears over nuclear safety and difficultires in disposing of waste, despite predicted losses of T$30 billion on a project that has already cost T$48 billion (US$1.58 billion).

GE was awarded the US$1.79 billion contract to supply two reactors (by March 2001) while Mitsubishi was due to provide two turbine generators for US$127.8 million. However the Government has given assurances that existing contracts will be honoured. They will try to reduce the loss by reselling the reactors and generators. Meanwhile American officials in Taipei at the de facto embassy the American Institute have strenuously denied claims that the USA has been putting pressure on the Taiwan government to withdraw its plan to scrap the power plant, or that it plans to.

The island has been divided over the issue politically for some time. President Chen Shui-bian had pledged to scrap the project during an election campaign in which Kuomtang party leaders including Pemier Tang, had vowed to safeguard it. Although local villagers in the north violently objected, the KMT government pushed the bill through anyway.

The uncertain fate of the country’s fourth nuclear plant may have contributed to the decision to quit in early October of Taiwan’s premier Tang Fei. He fervently believed that the plant was necessary to avert a future power shortage and had sworn to resign if the project was cancelled. But the plant has been seen generally as necessary to avert an energy shortage – a shortfall of 2500 MW by 2007 has been predicted – and rising unemployment. In particular the island’s high tech electronics industries have been warning that cancellation will lead to the loss of their competitive edge through power outages and unreliability. The ani-inuclear lobby say, though, that the country has a 12 per cent power surplus at present, and that future shortfalls should be met by building gas turbine plant.

Meanwhile industry’s confidence in Taipower’s ability to maintain a reliable power supply into the medium future is waning, especially in the electronics sector, the backbone of Taiwan’s industrial growth. Manufacturers at Hinschu Industrial Park, the island’s largest electronics manufacturing centre, have built their own dedicated power plant. Their concern follows a severe power outage in July last year when much of the island lost power following the failure of a major transmission line, and signs that investors are starting to look elsewhere, even to mainland China, for new opportunities.