SEOUL, Jan 4 (Reuters) - South Korea's energy minister said current power prices were insufficient for state-run power companies -- Korea Electric Power Corp (KEPCO) and Korea Gas Corp, urging an increase in electric rates.
Lee Youn-ho said late on Saturday that KEPCO incurred a 2.8 trillion won ($2.1 billion) shortfall in 2008 as it was unable to pass on a jump in energy costs to prices. The minister did not specify whether the number represented operating or after-tax losses.
'KEPCO's electric rates fall short of costs, or coming in at about 97.1 percent of production costs,' he told a town hall meeting between five government ministers and citizens televised live.
'Power rates have not been adjusted enough to send KEPCO into the black... Korea Gas cannot help but post losses due to high purchase prices.'
The government provided a combined 1 trillion won in subsidies to both utilities last year as it called on them to freeze power rates in the face of the economic slowdown.
But KEPCO posted a 789 billion won net loss in the nine months to September, 2008 and is forecast to report a 1.34 trillion won shortfall for the whole year, according to Reuters' survey of 15 analysts.
Lee said electric charges would be unlikely to come down before oil prices stabilised and the won currency strengthened further.
($1=1316.5 Won)
(Reporting by Kim Yeon-hee; Editing by Chris Pizzey) Keywords: KOREA ECONOMY/KEPCO (yeonhee.kim@thomsonreuters.com; +82 2 3704 5646; Reuters Messaging: yeonhee.kim.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Lee Youn-ho said late on Saturday that KEPCO incurred a 2.8 trillion won ($2.1 billion) shortfall in 2008 as it was unable to pass on a jump in energy costs to prices. The minister did not specify whether the number represented operating or after-tax losses.
'KEPCO's electric rates fall short of costs, or coming in at about 97.1 percent of production costs,' he told a town hall meeting between five government ministers and citizens televised live.
'Power rates have not been adjusted enough to send KEPCO into the black... Korea Gas cannot help but post losses due to high purchase prices.'
The government provided a combined 1 trillion won in subsidies to both utilities last year as it called on them to freeze power rates in the face of the economic slowdown.
But KEPCO posted a 789 billion won net loss in the nine months to September, 2008 and is forecast to report a 1.34 trillion won shortfall for the whole year, according to Reuters' survey of 15 analysts.
Lee said electric charges would be unlikely to come down before oil prices stabilised and the won currency strengthened further.
($1=1316.5 Won)
(Reporting by Kim Yeon-hee; Editing by Chris Pizzey) Keywords: KOREA ECONOMY/KEPCO (yeonhee.kim@thomsonreuters.com; +82 2 3704 5646; Reuters Messaging: yeonhee.kim.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.