Support for gas bills increased for struggling Koreans

Social Affairs

Support for gas bills increased for struggling Koreans

Published: 26 Jan. 2023, 16:47 Updated: 26 Jan. 2023, 17:50

Gas meters on a residential low-rise in Seoul on Thursday. The government announced a doubling of support for gas bills for the socially vulnerable. [YONHAP]

Vouchers to help low-income Koreans cover gas bills will be increased, while gas discounts offered to the vulnerable will be upped, the president's office announced Thursday.

The subsidies are being adjusted as households are hit with the double-whammy of cold weather and higher gas prices.

Energy vouchers for roughly 1.2 million households living on government basic income will increase from 152,000 won ($123) to 304,000 won this winter. The vouchers are from the Ministry of Trade, Industry and Energy.

State-owned Korea Gas Corp. (Kogas) will increase discounts on gas bills for 1.6 million households that are socially vulnerable, including people with disabilities, single parents, families receiving welfare, foster care facilities and North Korean defectors.

These households are currently getting discounts ranging from 9,000 and 36,000 won. They will increase to between 18,000 and 72,000 won.

“Although there are aspects where energy price hikes are unavoidable due to difficult economic conditions, the government will exert its best policy efforts to minimize the burden on the public for heating costs,” said Choi Sang-mok, senior presidential secretary for economic affairs Thursday.

Earlier this month, the government raised the average energy vouchers for low-income households 28 percent. The discounts on gas bills for vulnerable households were raised 50 percent.

The public remains dissatisfied as some people claim a doubling in gas bills due to more use and higher prices. While the severe cold weather this winter has increased the use of gas for heating, the Yoon Suk Yeol government’s aggressive energy bill hikes were blamed.

According to the Korea City Gas Association on Wednesday, the retail price of gas in Seoul this month stood at 19.69 won per megajoule, up 38.4 percent from 14.22 won in the same period a year earlier. This was largely due to the global energy crisis caused by the war in Ukraine, which pushed up the cost of Korea's liquefied natural gas (LNG) imports to a record high of $56.7 billion — far exceeding the previous record high of $36.6 billion.

Home heating costs for an individual heating system — not a district heating system — jumped 37.8 percent in just a year.

The president’s chief economic advisor said the artificial reduction of energy prices during the previous administration despite rising global prices was a major reason for the aggressive increase in energy rates.

The Moon Jae-in government kept rates steady from July 2020 raising them only a month before the Yoon government took office.

“The reason behind the recent sharp rise in heating costs is that we have suppressed rate increases for the past few years despite external factors pushing for an increase, and international gas prices have soared up to 10 times or more since the second half of 2021,” said Choi. “Compared to other countries, our heating prices are still at a very low level.”

The government raised gas prices four times — April, May, July and October. As a result, gas prices increased 42.3 percent, or 5.47 additional won per megajoule.

Kogas continues to experience financial difficulty. The state-owned gas company's accounts receivable totaled 8.8 trillion won at the end of last year, which jumped from 1.8 trillion won in 2021.

According to the Energy Ministry, LNG prices last year on average surged 128 percent.

Korea will maintain gas rates through the first quarter of 2023. But they are likely to be raised from the second quarter.

Kogas is demanding 8.4 won to 10 won more per megajoule, which would be double last year’s increase.

BY LEE HO-JEONG, LIM JEONG-WON [lee.hojeong@joongang.co.kr]