SEOUL—Korea Electric Power Corp. (KEPCO) and Korea Gas Corp., two of South Korea's major state-run energy companies, disclosed combined liabilities nearing 250 trillion won (approximately US$187.1 billion) at the end of 2023, a surge attributed to the global increase in energy prices.
According to Yonhap News Agency, KEPCO reported through a regulatory filing that its total debt had escalated to 202.4 trillion won last year, marking an increase of 9.6 trillion won from the previous year. On the other hand, Korea Gas noted a decrease in its total debt to 47.4 trillion won, down from 52 trillion won in 2022, as per the company's regulatory disclosures.
Industry sources indicate that KEPCO and Korea Gas faced a significant rise in debt interest payments in the last year, with amounts reaching 4.42 trillion won and 1.56 trillion won, respectively. These figures represent year-on-year increases of 57 percent and 75 percent for each company, culminating in combined interest payments of 6 trillion won for 2023—a record high and a 62 percent increase from the previous year.
Analysts point to the liabilities accumulated during 2021 and 2022 as the primary cause of the high interest payments. During these years, global energy prices surged due to supply shortages triggered by the COVID-19 pandemic and the geopolitical tensions following Russia's invasion of Ukraine. Despite efforts by KEPCO and Korea Gas to mitigate the impact of rising global energy prices through adjustments in electricity and gas rates, their profitability has been hampered by the prevailing high interest rates.
This financial strain on South Korea's key energy providers highlights the broader challenges facing the global energy sector, as companies navigate the volatile market conditions and strive to maintain operational stability amidst economic pressures.