South Korea planned to raise prices of natural gas used by households and industries by 4.4 percent on average this week as debts of the state-run gas supplier increased amid a hike in costs of materials, the economy ministry said Wednesday.
Prices of natural gas for household heating and cooking will rise by 4.3 percent, while those for industrial purpose will be hiked by 4.6 percent, according to the Ministry of Knowledge Economy. The hike will be effective from Feb. 22.
Korea Gas Corp. (KOGAS), the state-run gas provider, was in a financial distress as the gas prices have been frozen since July 2012 to help stabilize consumer prices. KOGAS's debt-to-equity ratio increased to 397 percent last year from 348 percent a year before.
The ministry said the hike was made to reflect rising costs of materials and sustain financial healthiness of the gas supplier, forecasting that it will lift the monthly gas bill of each household by 1,127 won (1.05 U.S. dollar).
The Knowledge Economy Ministry approved a request from the state-run Korea Electric Power Corp. (KEPCO) to hike electricity rates by an average 4 percent in early January. The move was estimated to life the consumer price inflation by 0.04 percentage point and the producer price growth by 0.105 percentage point.
The country's producer prices rebounded 0.2 percent in January from a month earlier after falling 0.3 percent in the prior month due to the hike in electricity prices.