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(LEAD) Further gas rate hikes inevitable due to high energy prices, uncollected payments: industry chief

Economy 15:22 February 09, 2023

(ATTN: ADDS more remarks in paras 5, 7-10; RECASTS headline for specificity)

SEOUL, Feb. 9 (Yonhap) -- South Korea's recent hikes in gas rates were inevitable due to high global prices, and the government will continue to raise the rates in line with market factors while extending support to vulnerable groups, Industry Minister Lee Chang-yang said Thursday.

Lee made the remarks during a parliamentary session amid a public outcry over a recent spike in heating bills. Government data showed that monthly gas rates surged more than 30 percent last month on-year.

"Last year, global natural gas prices skyrocketed as much as 10 times due to the Ukraine crisis and other factors. In a move to ensure stable energy supplies, the government reflected part of the factors in the rates," Lee said.

The minister, however, stressed that the government will continue moves to "normalize energy rates in phases in accordance with market principles," while pushing for the transition to a low-consumption and high-efficiency structure.

The Korea Gas Corp. had about 5 trillion won (US$3.96 billion) of uncollected payments, as the previous administration failed to take appropriate measures, Lee said.

"The inevitable rate hikes and the surge in wintertime demand raised the burden for the people. ... The government will implement measures to better support the vulnerable people," he added.

Lee, however, called for "careful consideration" of whether to provide heating bill subsidies also to middle-class households given the country's financial soundness and budget situation.

Earlier, President Yoon Suk Yeol instructed senior aides to "actively" seek ways to reduce the burden on the middle class and ordinary citizens.

"I understand that the president issued orders to more broadly find ways to reduce the burdens caused by heating bills," Lee said. "Extending subsidies would require a considerable amount of money and the criteria for who is seen as middle-class is quite vague."

Last month, Yoon approved 100 billion won in reserve government funds for emergency use in supporting vulnerable groups with soaring heating bills.

Speaking of the economic situation, Lee voiced concerns over a fall in both exports and investment this year amid a global economic slowdown and high interest rates.

"We will provide a record amount of 360 trillion won in trade financing this year and extend an additional 900 billon won to support exporters in the first half of this year alone," Lee said. "We will strive for an economic recovery and a rebound in an exports in the second half."

In January, exports fell 16.6 percent on-year to come to $46.27 billion, reporting an on-year decline for the fourth consecutive month particularly on weak global demand for semiconductors.

Buildings vent steam generated from heating in downtown Seoul, in this file photo taken Jan. 25, 2023, as South Korea experienced cold weather. (Yonhap)

Buildings vent steam generated from heating in downtown Seoul, in this file photo taken Jan. 25, 2023, as South Korea experienced cold weather. (Yonhap)


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