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KEPCO shares sink over cut in energy bills amid heat wave

All Headlines 09:52 August 07, 2018

SEOUL, Aug. 7 (Yonhap) -- South Korea's state-run Korea Electric Power Corp. (KEPCO) saw its share price plunge in recent trading sessions over a series of bad news, including the government's planned cut in electricity bills over a blistering heat wave, analysts said Tuesday.

On Monday, KEPCO skidded 2.51 percent to finish at 31,050 won (US$27.56), which is the lowest level since July 19. Over the past four sessions, the share price dived 7.25 percent to erase 1.44 trillion won in its market capitalization.

The rout primarily came, according to analysts, as the government is set to temporarily cut the energy bills as part of efforts to ease burdens for the public suffering from a scorching heat wave that has been gripping the whole nation for several weeks.

President Moon Jae-in ordered on Monday the power rates for July and August to be reduced, and the government and the ruling party will work out the details.

The measure appears to have spoiled investors' appetite for the public firm, which has already been affected by the news that KEPCO lost its status of the preferred bidder to acquire a 100 percent stake in the NuGen project that Toshiba Corp. holds. The 21 trillion-won project is meant to build a nuclear power plant in Britain.

Such a change came as Britain decided to mull the adoption of a regulated asset base model for the project, and the Seoul government is pushing to hold talks with the European nation and the Japanese firm to continue the project "in a way that serves the interests of all parties," officials said.

In addition to such developments, KEPCO shares have been hurt as one of its affiliates, the Korea South-East Power Co., has been under investigation for its suspected violation of U.N. Security Council sanctions by importing coal from North Korea.

"Investors appear to fret about the recent events' impacts on its bottom line at a time when the market overall has shown a weak flow," said Kang Sung-jin, an expert at KB Securities.

"But market watchers are forecasting a limited impact on its overall earnings if the past serves as a guide," he added, noting that the temporary cut in the power rates during the summer season of 2015 caused the unit price of electricity to inch down a mere 0.2 percent.

As of 9:30 a.m., KEPCO had lost 0.64 percent to 30,850 won.

KEPCO shares sink over cut in energy bills amid heat wave - 1

graceoh@yna.co.kr
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