S.Korea says will not privatise state energy firms

SEOUL, July 22 (Reuters) - South Korea said on Tuesday it will not privatise state-run Korea Electric Power Corp (KEPCO) (015760.KS) and Korea Gas (KOGAS) (036460.KS) amid public concerns that sales of state utilities may lead to a sharp rise in power costs.

"The government and the ruling party have decided to exclude electricity, gas, water and medical insurance industries from its privatisation plan," the Ministry of Finance said in a statement.

The decision came amid speculation that state energy firms would be sold in order to create a smaller and more efficient government.

South Korea has already announced plans to raise gas prices by up to 50 percent in the second half to reflect soaring import costs and has said it would also raise electricity prices later this year.

Seoul has kept a lid on electricity prices since 2006 despite significant rise in fuel costs.

KEPCO, the country's fifth-largest company, has a market capitalisation of $19 billion, while KOGAS, the world's largest commercial gas importer, is valued at around $5.4 billion. (Reporting by Angela Moon; Editing by Kim Coghill)