Ministry of Industry "Renegotiation of Gas Price Increase Within the Year"... Temperature Gap with Ministry of Economy and Finance

"Accumulated Pressure from Raw Material Cost Increases... Must Stay True to Cost-Linked Pricing Plans"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kwon Haeyoung] Following the electricity rate hike in the fourth quarter, the Ministry of Trade, Industry and Energy hinted at the possibility of raising city gas rates within the year.

A ministry official stated at a regular energy briefing held at the Government Complex Sejong on the 30th, "From a price management perspective, we decided to freeze the city gas rates for September, but as raw material costs continue to rise, cumulative pressure is increasing, so we plan to renegotiate with the Ministry of Economy and Finance regarding a rate hike at an appropriate time."

The Ministry of Economy and Finance announced the basic principle the day before to freeze public utility rates, including gas rates, as much as possible until the end of the year to stabilize prices. However, the Ministry of Trade, Industry and Energy argues that with the sharp rise in natural gas prices and the increasing burden on Korea Gas Corporation, it is necessary to reflect raw material costs in the rates.

The ministry official explained, "The issue with electricity and gas rates is whether to bear the cost now or later, but it is something that must be borne eventually," adding, "If the factors for rate hikes accumulate, side effects may occur, so we are considering the extent of the increase." He continued, "We must adhere to the basics of the cost-linked rate system, which reflects cost increases in the rates without other considerations," and added, "Immediately reflecting cost volatility can reduce the interest burden on power generation companies' borrowings."

This content was produced with the assistance of AI translation services.