Kepco reports operating loss of 21.8 trillion win in first nine months

The operating loss was largely due to the surge in costs, which increased 59.1 percent year-on-year to 73.6 trillion won.

Electricity supply monitor displayed at Korea Electric Power Corp's headquarters in Naju, South Jeolla. Kepco reported a near 30 trillion won operating loss accumulated in the first nine months of this year due to rising energy cost. [YONHAP]

While global energy prices have started to stabilize recently, the country’s sole power distributor, Korea Electric Power Corp. (Kepco), continued to report an operating loss.

According to Kepco on Friday, its operating loss amounted to 21.8 trillion won ($16.4 billion) in the first nine months of this year, which is a 1,842.5 percent year-on-year surge.

The operating loss was largely due to the surge in costs, which increased 59.1 percent year-on-year to 73.6 trillion won.

In particular, the cost of buying electricity from power companies including private companies has doubled on year to 30 trillion won, while fuel costs were up 79.9 percent to 24.3 trillion won.

Revenue between January and September amounted to 51.8 trillion won, a jump of 14.7 percent on year.

Brokerage firms including Hana Securities projected that by the end of this year, Kepco’s operating loss will likely reach over 35 trillion won.

In an effort to reduce the losses faced by the state-owned power company, the government has been raising electricity bills since April. But the market expects more to come.

“Raising the base fuel rate for 2023 is inevitable,” said Jung Hye-jung, KB Securities analyst. “Considering the hike in energy prices, including the 135.5 percent surge in bituminous coal, 109.6 percent hike in LNG and 51.5 percent increase of bunker crude in the first nine months, it’s likely that the base rate will be raised.”

The analyst also noted the difficulty that Kepco faces in attracting investments, especially as the local bond market has contracted significantly.

The recent debacle surrounding the bankruptcy of a Gangwon-backed developer of Lego Korea has caused major panic in the market.

“While Kepco’s cash flow is rapidly deteriorating, it is struggling to attract investments because of the contracting bond market,” the analyst said, noting the urgency of Kepco to quickly improve its deficit.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]