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South Korea lifts power prices despite public outcry

Saudi electricity Reuters/Daniel Becerril
The utility provider reported a 22.8% decline year on year in net profit to SAR10.34 billion in the first nine months of 2023

South Korea will raise electricity prices by 5.3 percent to partly reflect increased generation costs, a move delayed more than a month because of the likely effect on already high inflation and the cost of living.

It is the second increase in power prices this year after a sharper 9.5 percent hike that took effect at the beginning of the year. The price adjustment had been due on April 1 but was delayed after a public outcry about the increased cost of living.

The government of President Yoon Suk Yeol, who marked his first anniversary in office last week amid low approval ratings, faces conflicting pressure from utilities hit by mounting losses and households hurt by the rising cost of living.

Reflecting the political burden facing the government, energy minister Lee Chang-yang started his announcement by saying he was “heavy-hearted about the burden and concern coming from the price increases”.

Korea Electric Power Corp (Kepco), the state-run electricity powerhouse, suffered an operating loss of 6.2 trillion won ($4.69 billion) for the first quarter after a huge 32.6 trillion won loss for the whole of last year.

The ministry also announced a 5.3 percent increase in city gas prices for households. Both price hikes take effect on Tuesday.

South Korea’s inflation has been easing since peaking at a near 24-year high of 6.3 percent in July last year, but is still hovering around 4 percent in comparison with the central bank’s target of 2 percent.

With parliamentary elections some 11 months away, the latest opinion poll by Gallup Korea showed last Friday the disapproval rating on President Yoon stood at 59 percent, far outpacing the approval rating of 35 percent.