TAIWAN: REPEAT WATER PROBLEMS LEAD TO PERSONNEL

UNCLAS SECTION 01 OF 02 TAIPEI 003597

SIPDIS

STATE PLEASE PASS TO AIT/W AND EAP/RSP/TC

STATE PLEASE ALSO PASS TO USEPA/OIA

E.O. 12958: N/A
TAGS: AMGT SENV ECON TW ESTH
SUBJECT: TAIWAN: REPEAT WATER PROBLEMS LEAD TO PERSONNEL
SHAKE-UP


1. Summary. Water supply problems two years running in
northern Taiwan's Taoyuan County led to three officials
losing their posts. Minister of Economic Affairs (MOEA) Ho
Mei-yueh saved her job by delivering running water within
her deadline. Pump failures at a second pumping station
built after last year's problems have led to investigations
into possible corrupt activities. Additional water supply
improvements are under consideration. End Summary.

Poor Water Quality Precipitates Water Shortage
-------------- -


2. Two years in a row, typhoons caused major water shortages
in northern Taiwan's Taoyuan City and County. Most
recently, the August 5 Typhoon Matsa cut off water to
600,000 households in Taoyuan County for five days. This
situation followed water management measures put in place in
the aftermath of the August 24-25, 2004 Typhoon Aere, which
left a total of 320,000 homes and businesses (over 2 million
people) in Taoyuan without water for up to 19 days.


3. Ironically, the reason for the significant water
shortages in Taoyuan was not due to the quantity of water in
the region, but rather the quality. Following significant
rainfall during the two typhoons, Shihmen reservoir, which
provides water for the area, rose to record high levels.
While major rainfall typically causes higher turbidity
levels at all the reservoirs in the north, the turbidity
levels at Shihmen have been by far the most severe. Due to
mudslides around Shihmen, most of the stored water becomes
unsuitable for processing into drinking water.


4. Following the August 2004 typhoon Aere, state-owned
Taiwan Water Supply Corporation (TWSC) built a second
pumping station in an effort to prevent future turbidity-
induced water shortages following typhoons. Unfortunately,
in the aftermath of the August 5, 2005 Typhoon Matsa (the
second typhoon in as many weeks),half of the 10 pumps did
not work.

Political Fallout
--------------


5. Public outcry over successive water shortages has led to
political finger pointing. On August 9, President Chen Shui-
bian publicly apologized for the government's inadequate
handling of water resources, saying that it is not the first
time residents have suffered water shortages and that it was
time that someone take responsibility for the problem.
Prosecutors are now looking into whether corruption may have
played a part in the failure of the second pumping station.


6. In response, Minister of Economic Affairs Ho Mei-yueh,
who directly supervises the operations of the Water
Resources Agency (WRA),promised to step down from her
position if full water supplies to southern Taoyuan County
were not restored within a week of Typhoon Matsa.
Furthermore, WRA Director-General Chen Shen-hsien and state-
owned Taiwan Water Supply Corporation (TWSC) Chairman Lee
Wen-liang also offered to resign over the water controversy.
As water supplies were restored within Ho's deadline, she
retained her job. However, Premier Hsieh accepted Chairman
Lee's resignation and appointed Hsu Hsiang-kun (a former WRA
Director) as the Chairman of the TWSC in his place.
Furthermore, WRA Director-General Chen was given a warning.
Finally, MOEA Administrative Vice Minister Yiin Chii-ming
took responsibility at the senior level and stepped down to
be replaced by Hou He-hsiung, the former Deputy Mayor of
Kaohsiung. Hou is both a water resources expert and an
engineer.

Economic Impact
--------------


7. According to the Industrial Development Bureau (IDB),
industrial losses arising from the water shortages have been
minimal. Although water rationing measures for industry
were the same as for households, based on the water
shortages experienced last year, most companies had
installed reserve water tanks, drilled water wells or set up
water-purchasing plans to ensure manufacturing continuity in
times of drought. Nonetheless, IDB has acknowledged that if
the ongoing turbidity problems are not resolved, industrial
production could also be impacted.

Planned Prevention Measures
--------------


8. To prevent future shortage, WRA plans in the short-run to
increase the number of pumping stations at Shihmen
Reservoir. For the long-term, the EY plans to earmark
US$18.8 million in next year's budget for water projects
including the building of a water purification plant capable
of storing 800,000 tones of water. In addition, WRA hopes
to spend US$47 million on maintaining and extending Shihmen
and on raising water containment levels in order to take
water from three different levels of the reservoir so that
less turbid areas can be accessed following storms. Premier
Hsieh has also promised to plant more vegetation in upstream
areas and to strictly enforce laws prohibiting tree felling
and over development on hilly terrain.

Special LY Session
--------------


9. The Democratic Progressive Party (DPP) is continuing to
try to use water-related problems as an excuse to hold a
special legislative session to approve an NT$80 billion
eight-year budget for water resources and flood-control
management. Opposition parties remain unconvinced of the
necessity to hold a special session for programs that they
believe should be included in the regular budget.

Paal