Kogas head says gas prices must go up before winter

Choi Yeon-hye, the head of the state-run Korea Gas Corporation, speaks during a meeting with reporters held in Sejong on May 22, 2024, in this photo released by the company. [YONHAP]

The head of the state-run Korea Gas Corporation (Kogas) on Wednesday highlighted the need to gradually raise gas prices as early as possible, ahead of the winter season, to mitigate the impact of the hike on consumers.

The remark came as Kogas has been facing financial difficulties due to its inability to raise utility costs enough to address fluctuations in the global market for liquefied natural gas.

"Kogas is currently maintaining its operations through loans due to the low compensations for its resource purchases. Accordingly, the amount of interest for such debts reached 4.7 billion won ($3.4 million) per day," Kogas President Choi Yeon-hye said during a meeting with reporters in Sejong.

The president said such expenditures will inevitably place a greater burden on the people, as they will lead to further price increases.

"People will feel the impact of gas price hikes more strongly during the winter when demand is high. Therefore, we should aim for a soft landing by gradually raising prices starting in the summer," she added.

Kogas reported that as of March, the amount of uncollected payments, which refers to the expenditures used to purchase gas that have not been recovered through gas bills, reached 13.5 trillion won and is widely anticipated to reach 14 trillion won by the end of this year.

Kogas added the current rates only compensate around 80 percent of the purchase prices, noting that gas is currently being provided below the margin.

Choi noted such adjustments are needed considering global uncertainties, including the war between Russia and Ukraine, along with the Middle East conflict, which have sparked volatility in the energy and foreign exchange markets.

The company will also continue efforts to roll out self-rescue plans, including freezing the wages of executives, while maintaining welfare programs for people in need, she said.

Yonhap