State-run energy firms vow stronger self-rescue measures to improve financial health

▲ An office of the state-run Korea Electric Power Corp. in Seoul (Yonhap)

energy firms-self-rescue measures

State-run energy firms vow stronger self-rescue measures to improve financial health

SEOUL, April 11 (Yonhap) -- The Korea Electric Power Corp. (KEPCO) and the Korea Gas Corp. (KOGAS) said Tuesday they will soon announce additional "stronger" measures to improve their financial health in the wake of snowballing debt and limited hikes in energy bills.

The two state-run energy firms made the pledge during a meeting with the industry ministry, which is meant to check their implementation of self-help plans worth a combined 28 trillion won (US$20.46 billion) by 2027 to reduce snowballing debt and achieve management innovation.

KEPCO has promised a series of self-rescue measures, including the restructuring of overseas businesses, property sales and other cost-cutting moves, as it suffered a record high operating loss last year of 32.63 trillion won due to higher fuel costs and limited electricity rate hikes.

KOGAS had about 8.6 trillion won in uncollected payments as of end-2022.

"Before appealing for the need to adjust energy bills, we are working hard on intensive self-rescue measures. We will continue to be in an emergency management mode until debt issues are settled, and we will soon announce additional, stronger steps, such as reducing labor costs, selling assets and rescheduling investment projects," the companies said in a joint statement.

The government failed to raise electricity and gas bills enough to cover high energy import prices, as a hike in utility fees may impose financial burdens on the public amid high inflation and an economic slowdown.

Global liquefied natural gas prices more than doubled on-year to 1,564.8 won per ton last year, and the price of soft coal spiked to $359 per ton in 2022 from $139.10 a year earlier, according to government data.

The government jacked up the electricity rates for both consumer and industrial use for the first quarter by 13.1 won per kilowatt hour (kWh), the sharpest increase in about four decades, while it froze the first quarter natural gas prices to minimize the burden on the public, particularly during the winter.

Last month, the government was supposed to announce whether it would hike energy bills for the second quarter, but postponed the decision for additional consultations with the entities concerned.

In a report submitted to the National Assembly, KEPCO called for a rate increase of 51.6 won per kWh this year.

But President Yoon Suk Yeol has said that the government plans to freeze public utility fees in the first half of this year to help ease people's economic burdens.

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