[Photo by Yonhap]
Households in South Korea may have to pay higher energy bills this winter as local energy authorities are seeing to raise city gas tariffs in November amid skyrocketing global liquefied natural gas prices that have resulted in mounting debts at a state-run gas company.
The Ministry of Trade, Industry and Energy and public natural gas company Korea Gas Corp (KOGAS) are preparing to discuss with the Ministry of Economy and Finance in mid-October whether to hike city gas prices in November, according to sources from the energy ministry on Thursday.
The energy ministry already notified the financial ministry of the need to increase energy bills in November at the earliest to reflect the soaring global gas prices, but the economy ministry is said to have rejected the idea and have been insisting on freezing city gas bills until the end of this year.
City gas wholesale prices in Korea are supposed to move in sync with global gas prices with price adjustments in household energy bills every two months on an odd month. The Korean government, however, has frozen the city gas price over the past 15 months in a row after lowering the gas price by 11.2 percent for household use and 12.7 percent for general use in July last year to combat against the economic downturn during the Covid-10 pandemic.
The latest decision comes after global LNG spot prices have been on the rapid increase this year, weighing down on local gas suppliers’ profitability.
State-run KOGAS estimated that it has not been able to cover 1.5 trillion won ($1.3 billion) in LNG import expense with energy bills because of the tariff freeze this year. The actual gap may even grow larger as global energy prices continue to climb because energy demand is seasonally high in winter.
The uncollected bills are money for operation, such as LNG purchase and distribution, said a KOGAS official, warning that a rise in debts to cover losses would be translated as higher bills for customers.
By Baek Sang-kyung, Yang Yeon-ho and Cho Jeehyun
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]