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| Korea Electric Power Corporation (KEPCO) headquarters in Naju, South Jeolla Province / Courtesy of KEPCO |
By Anna J. Park
Due to rising oil prices, the Korea Electric Power Corp. (KEPCO) posted its worst-ever earnings for the first quarter of this year. While KEPCO is planning to recover from the financial crisis by liquidating possible assets to secure money, it is expected that the state-run power company could end up increasing people's electricity bills.
According to KEPCO on Friday, the company logged an operating loss of 7.78 trillion won ($6.06 billion) in the first quarter, an all-time-low quarterly performance. The quarterly loss even exceeded all of last year's 5.9 trillion won loss which, at the time, was a record-high annual loss.
The result is also an earnings shock, as it surpasses the market consensus of a 5.7 trillion won loss by more than 2 trillion won.
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While the quarterly revenue rose to 16.4 trillion won, which is a 9.1 percent jump from the same period last year, the cost of fuel for the first three months also rose to 7.64 trillion won, which is a whopping 92.8 percent year-on-year increase from 3.68 trillion won in the first quarter last year.
Consequently, the state-run power company's loss is unavoidable, as it has been continuing to sell electricity at the same price, even while the cost of fuel has doubled. The requirement imposed on KEPCO to purchase 12.5 percent of its fuel from renewable sources, which tend to be more expensive than traditional fossil fuels, also plays a part in the soaring fuel costs.
As the global energy prices are expected to stay high amid geopolitical instability and unfavorable macro conditions, pressure is building for KEPCO to raise its prices.
Currently, KEPCO issued a total of 15.6 trillion won worth of bonds to finance its liquidity, which far exceeds last year's 11.7 trillion won.
"The company plans to execute various measures to respond to the situation. We will also closely consult with the government about an option to reasonably reflect the rising fuel costs into electricity bills," an official from KEPCO said.
