Public Utility Bills to Be Raised
By Lee Hyo-sik
Staff Reporter
The government is leaning toward allowing public utilities and transportation firms to raise service charges, reversing its earlier pledge not to increase such costs, as oil and other raw material prices continue to rise.
Vice Strategy and Finance Minister Bae Kook-hwan said in a radio interview Wednesday that if international oil prices increase further, it would be inevitable that public utilities and transportation charges, including tap water fees, and train and bus fares, need to be hiked to reflect rises in the prices of imported goods.
``The government tried to rein in a range of public service charges in the first half of the year to curb rising consumer prices and ease the growing financial burden on households. But if crude prices climb further, the government will have difficulties in holding back utilities and transportation costs,'' Bae said.
His remarks are seen as a step back from the government's previous position to freeze hikes this year.
Strategy and Finance Minister Kang Man-soo said last week that he would encourage state-run utility providers and municipal governments to freeze a range of public service charges, the latest in a series of anti-inflation measures that the government has unveiled over the past month in a bid to rein in rises in consumer prices.
The government also decided to clamp down on the hoarding of iron bars and other construction materials as well as price collusion among suppliers of daily necessities.
``Increasing fiscal spending could put upward pressure on consumer prices but what is more important is to lessen the financial burden on households. Part of the planned supplementary budget will be used to financially help public utility firms in return for not hiking fees,'' Bae said.
The Cabinet Tuesday decided to draw up a 4.9 trillion won supplementary budget from last year's budget surplus to assist the low-income bracket, hit hard by rises in oil prices and stabilize their livelihood.
Out of the 4.9 trillion won, 83.7 billion won will be spent as energy subsidies for low-income people; and 1.26 trillion will be used to make up for deficits at Korea Electric Power Corp. and the Korea Gas Corp., after they refrain from raising energy prices.
The government also allocated 1.4 trillion won for research into new and renewable energy sources, energy saving facilities and overseas oil field development projects. The extra budget bill will be submitted to the National Assembly as soon as it opens.
Vice Minister Bae projected the additional fiscal spending will boost the economic growth rate by 0.07 percentage points, while increasing consumer prices by an additional 0.01 percentage point in the second half and by 0.17 percentage points next year.