The stock price of state utility company Korea Electric Power Corporation (KEPCO) lost nearly 9 percent in just five trading days as its bottom line is expected to worsen by the government decision to cut electricity bills to ease burden on households in the hottest summer in 111 years on top of a string of negative news.
According to the Korea Exchange on Tuesday, shares of KEPCO plunged 8.6 percent over the last five sessions from July 31. Its shares finished Tuesday 1.93 percent down from the previous close to the lowest of 30,450 won ($27.09) since July 19.
KEPCO’s losses are estimated to have widened in the second quarter from the operating losses of 127.6 billion won in the first quarter and 129.4 billion won in the fourth quarter of last year as it had to rely less on profitable nuclear reactors to generate electricity amid rising oil cost under the liberal government’s policy to phase out of nuclear reactors.
Its bottom line likely would deteriorate in the third quarter from the government’s decision to relieve summer household electricity bills amid hardship on low-income and working class during the unprecedentedly hot and long summer. While the move is good news for consumers, it wrecks the utility company’s profitability as it must shoulder extra losses during the peak season.
The company also received a major setback on the external front.
KEPCO lost the exclusive right to buy Toshiba’s stake in the NuGeneration (NuGen) nuclear project in Moorside, the UK, as the Japanese firm announced to search for other options to uphold the multibillion dollar reactor project that would be in charge of supplying 7 percent of power across the U.K.
Separately, its fully-owned subsidiary Korea South-East Power Co. (KOEN) is under probe by authorities for the possibility of violating the United Nations sanctions on North Korea by importing 9,700 tons of North Korean coals since the second half of last year. Trade and transshipping of North Korean coals and other minerals are banned under the UN Resolution.
By Kang Doo-soon and Lee Ha-yeon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]