Taiwan’s cabinet has approved a record NTD607.6 billion (US$19.8 billion) supplementary budget for 2026, with nearly 70 per cent earmarked for energy subsidies and investment intended to cushion households and businesses from higher fuel prices caused by conflict in the Middle East.
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The conflict between the United States and Iran has disrupted tanker traffic through the Strait of Hormuz, a conduit for about a fifth of global oil and liquefied natural gas shipments, driving up crude oil, LNG and shipping costs.
Crude prices reached a record US$144 a barrel earlier this year before retreating in late June, according to Taiwan’s economy ministry. Prices have since risen again amid renewed fighting and continuing disruption to shipping through the strait. Brent crude ended 4 September at US$96.28 a barrel, up 7.6 per cent over the week.
Taiwan, which relies heavily on imported energy, has sought to prevent those higher costs from feeding through fully to household bills and broader inflation. State-owned oil and gas supplier CPC Corp and other suppliers have instead absorbed much of the increase under government price-stabilisation measures, adding to the state-owned company’s financial losses.
The proposal, approved on Thursday, includes NTD233.8 billion (US$7.6 billion) in fresh capital for CPC Corp, the company’s largest-ever capital injection, as well as NTD180.9 billion (US$5.9 billion) to compensate energy suppliers for holding down electricity, petrol, natural gas and bottled gas prices.
The supplementary budget will be submitted to parliament for approval.
Premier Cho Jung-tai said the additional spending was needed to respond to the Middle East conflict and fund defence programmes, post-disaster reconstruction, increases in public-sector salaries and expanded social welfare, cabinet spokesperson Michelle Lee said.
The economy ministry received the largest allocation among government agencies, at NTD421.7 billion (US$13.7 billion), or 69.4 per cent of the total.
That includes NTD101.4 billion (US$3.3 billion) to compensate CPC for limiting increases in petrol, diesel and natural gas prices, NTD71.1 billion (US$2.3 billion) for state-owned Taiwan Power Co to keep electricity tariffs unchanged and NTD8.4 billion (US$274 million) for CPC and Formosa Petrochemical to stabilise bottled gas prices.
The government has ordered CPC, Taiwan Power and Formosa Petrochemical to help contain energy costs since the Middle East conflict began, the economy ministry said.
Without those measures, the price of 95-octane unleaded petrol would have risen to NTD45.4 (US$1.48) per litre from NTD28.9 (US$0.94), while the price of a 20-kg cylinder of bottled gas would have increased to NTD974 (US$31.74) from NTD766 (US$24.96), according to the ministry.
Prices for household bottled gas and natural gas will remain frozen until the end of the year, it added.
Economy Minister Kung Ming-hsin said privately owned Formosa Petrochemical was included in the bottled gas subsidy because the product was used mainly by households and small food vendors, meaning sharp increases could feed directly into consumer prices.
Unlike petrol and diesel, bottled gas could not be exported to generate profits that would offset losses in the domestic market, Kung said.
The NTD233.8 billion (US$7.6 billion) capital injection into CPC alone accounts for 38.5 per cent of the supplementary budget.
The cabinet said CPC had recorded losses for six consecutive years since 2020 after absorbing costs under government price-stabilisation policies while continuing to invest in natural gas infrastructure.
Deputy Economy Minister Lai Chien-hsin said the capital would strengthen Taiwan’s natural gas supply by supporting the construction of pipelines along the island’s western coast and liquefied natural gas storage facilities.
Projects could include the third phase of CPC’s Taichung LNG terminal, the Intercontinental LNG terminal and the third LNG receiving terminal in Taoyuan, the ministry said.
The transport ministry will receive another NTD2.6 billion (US$85 million) to subsidise fuel used by airlines, intercity buses and taxis, as well as passenger fares on air and sea routes serving Taiwan’s outlying islands.
Together, energy-related allocations administered by the economy and transport ministries amount to NTD417.3 billion (US$13.6 billion), or 68.7 per cent of the supplementary package.
The proposal could face resistance in parliament, where opposition parties hold a majority.
Hsu Yu-chen, Chief Secretary of the main opposition Kuomintang’s parliamentary caucus, said CPC’s financial problems were longstanding and should have been addressed through the government’s regular 2027 budget.
The caucus would scrutinise the proposal closely and could seek to remove the entire NTD233.8 billion (US$7.6 billion) CPC capital injection, she said, according to Taiwan’s Central News Agency.
Parliament passed the government’s regular 2026 budget on 14 August after 351 days of deliberations, the latest passage of a central government budget in Taiwan’s history.
The supplementary package also includes NTD7 billion (US$228 million) for reconstruction following the Matai’an Creek landslide-dammed lake disaster. The money will fund the removal of more than 200 million cubic metres of sediment and the strengthening and raising of river embankments to improve flood protection.
