South Korea to Raise Electricity, Gas Prices, Officials Say
South Korea will raise prices of electricity and gas in the second half of this year to narrow losses at state-run utilities, government officials said.
Korea Electric Power Corp. and Korea Gas Corp. are paying higher fuel costs as oil prices surged, Yim Jong Yong, director general of economic policy at the Ministry of Strategy and Finance, told reporters in Seoul.
"We cannot hold back prices anymore," Yim said. "The loss will increase if we don't raise charges for utilities."
South Korea, where inflation has reached a 10-year high, has kept electricity rates unchanged since a 2.1 percent increase on Jan. 15, 2007. The government also maintained city gas prices this year.
"The government is discussing when and how much to increase electricity and gas prices by," Knowledge Economy Minister Lee Youn Ho said in a briefing.
Crude oil prices in New York doubled in the past year and touched a record $143.67 a barrel on June 30. Natural gas has advanced 80 percent this year.
South Korea's government plans to freeze train fares, water prices and highway toll to help prevent inflation from accelerating, according to the government's semiannual policy report released today.
"I don't expect big increases in electricity and gas prices as the government is focusing on inflation," said Yun Hee Do, an analyst at Korea Investment & Securities Co.
South Korea's Kospi stock index fell by the most in almost four months as the government has shifted its focus from stoking the economy's expansion to controlling inflation after President Lee Myung Bak's approval rating plunged.
The South Korean economy is facing difficulties amid an "oil shock" and the government aims to stabilize prices, Lee Dong Kwan, the president's spokesman, said.
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