KEPCO suffers record operating loss of $25 billion in 2022 due to soaring fuel prices

By Park Yoon-bae Posted : February 24, 2023, 17:42 Updated : February 25, 2023, 07:50

The picture shows the building of the state-run Korea Electric Power Corp. (KEPCO) in central Seoul. The utility company said February 24 that it suffered a record operating loss of 32.63 trillion won ($25.02 billion) last year due to soaring fuel prices last year. [Yonhap]

SEOUL -- The state-run Korea Electric Power Corp. (KEPCO) said February 24 that it suffered a record operating loss of 32.63 trillion won ($25.02 billion) last year, prompted by soaring fuel prices and a slow pace of electricity rate hikes.
The loss was more than five times the company's 2021 operating loss of 5.84 trillion won. In the last three months of last year alone, KEPCO incurred a 10.76 trillion won loss, hitting an all-time high quarterly figure.
KEPCO said that its sales increased 17.5 percent year-on-year to 71.27 trillion won in 2022, boosted by growing power supply and a hike in electricity charges.
Its profit from electricity sales edged up 2.7 percent to 66.19 trillion won on the back of a rise in the manufacturing industry's factory operation rate and a 11.5 percent hike in electricity rates.
However, the company saw its operational costs surge 56.2 percent to 103.77 trillion won. It spent 34.66 trillion won on buying fuels, while paying 41.91 trillion for the purchase of electricity from privately-run power stations.
A company official attributed the skyrocketing operating loss to more than a twofold surge in the global prices of fuels such as liquefied natural gas (LNG) and coals.
KEPCO plans to raise 20 trillion won in the next five years to regain financial stability by selling its non-core assets, rescheduling its business projects, and cutting costs. It is also seeking to introduce a reasonable system to link electricity rates to production costs.
KEPCO raised electricity charges on three occasions last year -- in April, July and October -- to cover higher fuel prices. It also hiked power rates by 9.5 percent in January.
The utility firm needs to ramp up electricity rates further to reduce its snowballing loss. But the Yoon Suk-yeol government has recently decided to postpone an additional hike on fears about growing financial burdens on the part of consumers.
Industrial experts and market analysts are raising concerns that the postponement is only a stopgap measure that could exacerbate the financial status of KEPCO.
KEPCO closed 0.49 percent higher at 18,360 won on the Seoul stock exchange on February 24. The share price, however, was down 14.6 percent from 21,800 won on December 29.
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