A tough year so far for CPC Corp. took another dismal turn this week, as Taiwan's Agency Against Corruption (AAC) announced on Wednesday that the head of the state-run oil and gas company was under investigation on suspicion of corruption.

Citing a preliminary probe by the Department of Civil Service Ethics, the AAC indicated that CPC Chairman Chu Shao-hua was being investigated for bid-rigging in relation to a CPC tender in 2006 for an oil leak detection system.

Legislators alleged in April that the head of CPC helped a contractor with past connections to Chu win a contract for the leak monitoring system when he was deputy general manager of CPC.

On the recommendation of the Ministry of Economic Affairs, a preliminary probe was launched, and the investigation has subsequently been referred to the AAC.

The investigation into Chu comes less than a month after the AAC launched a similar procurement-related probe into state-owned utility Taipower, which generates roughly 80 percent of Taiwan's electricity and purchases the bulk of oil and gas imported by CPC.

Edward Chen, then Chairman of Taipower, resigned two weeks before the investigation, following a storm of criticism over the company's plans in April to raise tariffs by more than 35 percent to cover rising fuel costs that had contributed to losses of NT$117.9 billion ($3.93 billion) loss in 2011.

"There's traditionally been a negative attitude held towards state-controlled enterprises in Taiwan, and inefficiency and scandals are not much of a surprise," a research director at one of the Democratic Progressive Party's policy think tanks told Interfax on Thursday.

"The interesting question is 'why now'? The Kuomintang (KMT) is the ruling party and controls the Control Yuan, which is overseeing the [CPC] investigation," the director added.

The KMT, headed by Taiwanese President Ma Ying-jeou, is typically seen as pro-business, but Ma has come under harsh criticism since his reelection in January over rising living costs, which have contributed to his approval rating falling below 20 percent.

The corruption probe into Chu adds to CPC's woes this year, with the company posting a loss of $1.3 billion for 2011, and having to defend price hikes for gasoline and liquefied natural gas (LNG) to cover the increasing costs of imported oil and gas.

CPC imports all of the LNG consumed by Taiwan, operating two terminals that received a total of 11.9 million tons of LNG in 2011, a nine percent increase from 2010.

The figure is just shy of the 12.21 million tons of LNG imported by China last year, but unlike the mainland, Taiwan pays Japan Crude Cocktail-linked prices for the bulk of its LNG. Along with South Korea and Japan, Taiwan saw its LNG import bill rise with last year's surge in crude oil prices.

LNG consumption is expected to continue to grow in Taiwan, and CPC has signed a number of deals over the past two years that will boost imports beginning in 2013.

Qatar's RasGas III will supply Taiwan with 1.5 million tons per annum (mtpa) beginning next year, adding to the three mtpa already supplied by RasGas II, and CPC will buy 1.75 mtpa beginning in 2017 from the Ichthys LNG project in Australia.

CPC has also inked heads of agreements with PNG LNG in Papua New Guinea for 1.2 mtpa starting in 2014, and will buy two mtpa from Shell's global portfolio from 2016.