KOGAS operating losses may top 4.9 tln won: analysts

SEOUL, April 26 (Yonhap) -- The accumulated operating losses of the state-run Korea Gas Corp. (KOGAS) may have reached 4.95 trillion won (US$3.68 billion) in the first quarter of this year, fueling the need to adjust public utility prices, analysts said Sunday.

Local brokerage firms speculated that the inability to increase prices -- despite
rising international natural gas costs and the depreciation of the Korean won --
probably caused losses to balloon by 1.5 trillion won in the first quarter.
Under South Korean law, price adjustments in basic gas and electricity services
must be authorized by the government, but Seoul had been slow to do so for fear
of destabilizing consumer prices at a time when the economy was experiencing its
worst slump in more than a decade. The government said the country may post
negative GDP growth this year.
As of late last year, KOGAS reported net losses of 3.45 trillion won. Because the
company is state-run, all such losses are officially reported as account
receivables or payments that have not been received.
"As of late March, the total of accounts receivable may have reached just under 5
trillion won, and although the cost of importing liquefied natural gas is
falling, it may not be until May or June that losses may decrease," said a market
watcher at Korea Investment and Securities Co.
This, he said would mark a 28-fold increase from 175.6 billion won worth of
accounts receivable reported for late 2007.
He added that with accumulated losses exceeding the aggregate value of KOGAS
stocks that stood at 3.21 trillion won as of Friday, it may be impossible to pull
off any noticeable improvement in the corporation's financial statement in the
short term.
Other analysts from Hyundai Securities Co. agreed that losses may have reached
around 5 trillion won since there have been no prices changes since November,
when only limited hikes were allowed that did not reflect gains in import costs.
Echoing such predictions, a KOGAS source who declined to be identified said
market predictions were probably close to the mark, although the exact amount of
accounts receivable needs to be precisely tallied.
Related to the problem of rising losses, Minister of Knowledge Economy Lee
Youn-ho said last month that in order to properly regulate supply and demand in
the energy sector, there may be a need to raise prices once the economy shows
signs of recovery.
Many in the government have forecast that the economy may start to gain momentum
in the second half, making it likely that Seoul will authorize utility price
hikes later in the year.