South Korea’s state utility firm Korea Electric Power Corp. (KEPCO) slipped into the red for the first time in six years due to higher fuel costs and the state-imposed cutback on nuclear power.

KEPCO said Friday it posted an operating loss of 208 billion won ($184.8 million) on a consolidated basis in 2018, compared with an operating profit of 4.95 trillion won in the previous year.

Sales totaled 60.6 trillion won, up 1.4 percent on year. It also swung to a net loss of 1.15 trillion won on increased interest payments.

KEPCO shares finished Friday up 3.15 percent at 34,350 won.

KEPCO said its bottom line took a hit from the sharp rise in global fuel costs last year, putting a 3.6-trillion-won dent on its balance sheet. Prices of Dubai crude surged 30 percent on year to $69.7 a barrel in 2018. Bituminous coal prices were up 21 percent at $107 a ton and liquefied natural gas (LNG) up 16 percent at 768,000 won a ton.

The costs of outside electricity sourcing also soared by 4 trillion won, or 28.3 percent, from 2017. Private power companies generally use the more expensive LNG, whose prices saw a big rise in the recent year. KEPCO also had to shoulder huge costs because of last summer’s extreme heat wave, which resulted in an 18.0 percent jump in its private sourcing volume.

KEPCO said its overall cost structure has gone up from its greater reliance on private companies following a government plan to phase out nuclear power, which is a cheaper energy source than LNG. As part of President Moon Jae-in’s energy initiative to wean the country off nuclear power, the operation rate of nuclear reactors in Korea fell from 71.2 percent in 2017 to 65.9 percent in 2018.

KEPCO is currently in talks with the Ministry of Trade, Energy and Industry to revamp its electricity pricing model. Raising overall costs is inevitable, KEPCO said, with most of the tweaks likely to come from the progressive electricity tax plans in the residential sector and overnight discounts offered to industrial customers.

By Kang Doo-soon and Kim Hyo-jin

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