South Korean Updates: Gov't to remove electricity subsidies for companies next year (22 May 2013)

Gov't to remove electricity subsidies for companies next year
2013-05-22

May 22, 2013
Yonhap News Agency

electricity subsidies-end
Gov't to remove electricity subsidies for companies next year 
SEOUL, May 22 (Yonhap) -- The government plans to scrap electricity subsidies for companies next year as it seeks ways to reduce energy consumption and save budget, officials said Wednesday.

The government has offered the subsidies to companies that cut either more than 20 percent of their average electricity use or more than 3,000 kilowatts per day during peak hours.

The subsidies surged to more than 400 billion won (US$359 million) in 2012 from 27.4 billion won in 2009. The dramatic jump comes as unusually high and low temperatures gripped the country during summer and winter in recent years.

The government is considering ways that would slap surcharges on companies that use electricity during peak hours, or mandate them to reduce electricity use.

The move comes a week after the Ministry of Trade, Industry and Energy submitted the plan to President Park Geun-hye during a meeting on the country's fiscal health.

The plan "is meant to control electricity demand in a reasonable way and reduce budget spending," a government official said, noting big companies received most of the current subsidies.

Hyundai Steel Mill Co., a steelmaker affiliated with the country's top carmaker Hyundai Motor Co., received 34.3 billion won in subsidies between 2008 and 2011.

POSCO, the world's fourth-biggest steelmaker, and Dongkuk Steel Mill Co. received subsidies of 7.9 billion won and 6.2 billion won during the cited period, respectively.

"What is important is to come up with countermeasures to ensure that there won't be problems with supply and demand of electricity," an official of the Ministry of Trade, Industry and Energy said.

Last year, South Korea issued numerous power shortage warnings during peak seasons in summer and winter.

The government has said it will raise the country's power reserve rate to 21.2 percent in 2015 from 3.8 percent in 2012.

The power reserve rate is a crucial indicator of stability in power supply with a reserve rate of below 4 percent of total generation capacity considered dangerous.

South Korea imports nearly 97 percent of all fuel, such as oil or coal, for energy consumption.

entropy@yna.co.kr

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Source: 
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