South Korea to raise domestic gas prices by 5.8 pct
SEOUL Dec 31 (Reuters) - South Korea will raise domestic natural gas prices by an average 5.8 percent from Wednesday to reflect costlier imports and to meet rising demand following the shutdown of some nuclear reactors, Korea Gas Corp (KOGAS) said.
The hike, the first since February this year, is projected to increase average annual consumer inflation by 0.12 percentage points, as city gas accounts for 2.06 percent of the consumer price index, an official at state-run KOGAS said.
Asia's No. 4 economy, which relies heavily on oil and gas imports, has been trying to secure stable long-term power supplies in a bid to curb inflation led by higher energy costs.
However, a series of nuclear plant shutdowns has forced it into the more expensive spot market to ensure adequate power supplies.
South Korea has 23 nuclear reactors, which generate about a third of its electricity. Six units are currently offline, including three halted since late May to replace control cables that were supplied with fake certificates.
KOGAS said in a statement that the shutdown of the troubled three reactors had forced it to buy about 1.85 million tonnes more gas on the spot market.
"If we keep not reflecting changes in import cost, it can lead to an increase in Korea Gas's payments receivable and create problems of stable natural gas supply. Thus it was inevitable that we increase domestic gas rates," the statement said.
KOGAS, the world's largest corporate buyer of liquefied natural gas, said selling gas below at artificially low prices would cost it 5.1 trillion won ($4.83 billion) in 2013, down from 5.5 trillion won a year earlier.
Its debt-to-equity ratio stood at 385 percent in 2012, up from 348 percent in 2011, the statement noted.
KOGAS planned to announce specific plans to improve its financial structure by the end of January, it added.
($1 = 1055.3500 Korean won) (Reporting By Jane Chung; Editing by Richard Pullin)
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