Officials say Taiwan curbs won't stop plant

PUBLISHED : Tuesday, 20 August, 1996, 12:00am
UPDATED : Tuesday, 20 August, 1996, 12:00am

Officials in Fujian province are confident construction of a Taiwan-invested power plant in the city will not be affected by Taiwan's plans to limit investments in mainland China.

Zhangzhou Communist Party Secretary Cao Degan said construction of Formosa Plastics Group's power plant in Houshi, Longhai, would continue uninterrupted.

'We have not received any notice from Formosa's chairman, Wang Yung-ching , about changing the power plant investment plan,' he said.

'We only learnt from media reports Formosa had withdrawn its Houshi investment application from the Taiwan authorities, but reports did not say Mr Wang had withdrawn his investment plan.' It had been reported the Taiwanese group withdrew the investment application for its US$3.5 billion Zhangzhou Houshi power plant from Taiwan's Investment Commission on Friday, two days after president Lee Teng-hui ordered a review of the government's policy on mainland investment.

One of Mr Lee's proposals was to cap company investment in China at 20 per cent of Taiwan investment.

Mr Cao, who was closely involved in discussions with Formosa, said Zhangzhou was confident because Mr Wang had expressed a strong intention to 'do some big business on the mainland' during several previous visits to Fujian.

'Mr Wang made the decision after careful consideration, including China's power market and waterways leading to the power plant,' he said.

'We believe the potential political obstacles have been taken into account.' Zhangzhou spent more than two years negotiating with Formosa before the investment contract was signed on May 28, 1996, and Mr Wang visited Zhangzhou and Longhai several times.

It is widely expected the Houshi power plant will not be scrapped because Mr Wang can conduct the investment through Formosa's subsidiaries in the United States. Formosa's US subsidiary has already registered Hua Yang Power Company in Longhai to handle the power plant development, according to the city's acting mayor, Kang Junfu .

Zhangzhou mayor Li Tiansen said construction of the Houshi power plant had begun last month and that initial investment capital of more than $10 million had been remitted to Zhangzhou for the project. Zhangzhou officials said development of the city's power industry would not be affected if Formosa decided to scrap its investment.

They said plenty of foreign investors had expressed similar interest in building huge power plants along the coast of Longhai.

Mr Li said: 'Fujian is a huge market for power development and the coast in Zhangzhou is a natural deep-water port which can handle vessels over 100,000 deadweight tonnes, making it an ideal location for power plant and port development.' Direct investment in the mainland is banned by Taiwan, but unofficial figures show more than 30,000 Taiwan-funded ventures have been set up on the mainland.

The Houshi power plant, with a designed capacity of 3,600 megawatts, will be the largest of these.