SEOUL, Feb 20 (Reuters) - South Korea will increase domestic rates of gas by 4.4 percent on average from Friday, to reflect higher costs of natural gas and recoup part of the hefty losses of state-run Korea Gas Corp (KOGAS), the economy ministry said on Wednesday.
The hike, the first since last June, is projected to raise average annual consumer inflation by 0.08 percentage point, as city gas accounts for 1.96 percent of the consumer price index, a ministry official said.
Asia’s fourth-largest economy, which depends on imports of oil and gas, has struggled to curb inflation led by costlier energy prices, and stopped KOGAS from raising gas prices since last June, when it hiked the rate by 4.9 percent on average.
“The past price freeze contributed to an increase in Korea Gas’s payments receivable and debt ratio as its prices failed to reflect the costs of importing natural gas,” the ministry said in a statement.
The amount KOGAS booked as payments receivable, or losses caused by lower pricing than cost, snowballed to 5.5 trillion won ($5.08 billion) by the end of 2012, up from 4.4 trillion a year ago, according to the statement.
Its debt-to-equity ratio also rose to 397 percent last year from 348 percent in 2011, the ministry added.
KOGAS, the world’s largest corporate buyer of liquefied natural gas, has a 95 percent share of South Korea’s wholesale gas market. ($1=1082.1500 Korean won) (Reporting by Meeyoung Cho; Editing by Clarence Fernandez)