Formosa Petrochemical Corp. outlined an ambitious NT$100 billion ($3.1 billion) coal-to-gas power plant project after reporting a 73% profit decline that prompted the company to tap retained earnings for the first time to maintain dividends.
Chairman Cao Ming told shareholders Thursday that the petrochemicals giant secured a Taiwan Power Company natural gas generation contract in May for its Mailiao facility, with completion targeted for 2029. The timing aligns with Taiwan’s accelerating transition away from coal as the government moves to phase out coal-fired generation by 2034, one year ahead of schedule.
The Yunlin County-based company reported net income of NT$5.97 billion ($185 million) for 2024, down from NT$21.9 billion the previous year, as macroeconomic headwinds battered performance. Earnings per share fell to NT$0.63, leading the board to approve a NT$0.8 dividend that required dipping into accumulated earnings rather than relying solely on annual profits.
Beyond the power plant conversion, Formosa Petrochemical is pursuing two other major initiatives to reduce its dependence on traditional refining margins. The company broke ground on an ethane-based ethylene facility with 300,000-ton annual capacity, scheduled to begin production in early 2027.
Cao Ming highlighted the economic advantages of ethane cracking, which yields 85% ethylene conversion rates compared to 33% for light oil processing. The technology mirrors investments the Formosa Plastics Group has made in Louisiana, where it’s developing a $9.4 billion petrochemical complex.
The company also launched sustainable aviation fuel production, targeting 5,500 tons this year through partnerships with domestic airlines. Taiwan’s Formosa Petrochemical plans to produce up to 6,000 tons SAF for local airlines this year, though this represents a modest slice of the expanding Asian market.
Formosa Plastics Group companies have faced challenging conditions, with three major subsidiaries posting losses last quarter while the fourth managed only minimal profits. The broader group has been hit by soft demand and price competition across its petrochemical operations.
Taiwan’s energy transition creates both opportunities and uncertainties for Formosa Petrochemical. The island missed its 2025 renewable energy target of 20%, achieving only 11.1% as of November 2024, potentially extending reliance on gas-fired generation.
The company expects its gas station network to capture 22.1% market share in the first half of this year, while its newly launched mobile app has attracted over 400,000 members.
