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Seoul to raise gas prices by 50%
South Korea, the world's second-largest natural gas importer, plans to raise gas prices by 50 per cent in the second half to reflect soaring global energy prices, the government said on Tuesday.
- Reuters
- Published: 23:39 July 15, 2008
Seoul: South Korea, the world's second-largest natural gas importer, plans to raise gas prices by 50 per cent in the second half to reflect soaring global energy prices, the government said on Tuesday.
The move is likely to add further to inflation pressure in the country, the world's 10th-largest energy consumer and No 5 crude oil importer, as the government already said it was considering allowing electricity price hikes in the second half.
Policymakers warned of the danger of commodities-led inflation yesterday after data showed that June import prices measured in local currency terms scored the fastest annual rise in more than 10 years.
"The (gas) increase will be gradually implemented to minimise the impact [on consumers and economy], and the majority of the increase is for industry use," said Lee Youn-ho, the Minister of Knowledge Economy, according to a ministry spokeswoman.
Inevitable
The ministry said later in a statement that gas tariffs for industrial use would rise gradually in August, September and November, while retail prices for 11.5 million households would be increased in three stages, each consisting of a seven per cent hike.
"Price increases are inevitable. Otherwise, Korea Gas Corp [Kogas] will incur over 3 trillion won in losses due to a 50 per cent jump in gas prices in the first half," the statement said.
State-run Kogas is the world's largest commercial buyer of liquefied natural gas, and South Korea increased natural gas imports by 17 per cent in the first half as utility firms turned to the more economical fuel for power generation in the face of soaring crude oil prices.
During the first half of this year South Korea spent $70.2 billion to purchase energy, up from $43.3 billion a year ago, as energy import prices rose more than 50 per cent.
South Korea has kept electricity prices unchanged since a 2.1-per cent rise in early 2007 at the expense of utility firms struggling with higher energy prices.
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