[Asia Economy Reporter Myung-hwan Lee] Korea Electric Power Corporation (KEPCO) is showing an upward trend in early trading on the 9th. This appears to be due to the increased possibility of electricity rate hikes following the National Assembly's rejection of the bill to raise the issuance limit of KEPCO corporate bonds (Hanjeonchae) in the plenary session.
As of 9:30 a.m. that day, KEPCO was trading at 20,000 won, up 3.36% (650 won) from the previous trading day.
In the previous day's plenary session of the National Assembly, the partial amendment to the Korea Electric Power Corporation Act (KEPCO Act), which would have raised the issuance limit of KEPCO corporate bonds (Hanjeonchae) from the current double to five times, was rejected. Opposition party lawmakers, who hold the majority of seats, largely opposed and abstained, preventing the bill from passing the plenary session.
In response, securities firms diagnosed that an electricity rate hike is inevitable for KEPCO to supply electricity normally. KB Securities researcher Hye-jung Jung said, "For normal electricity supply, given the rejection of the bill to raise the KEPCO bond issuance limit, direct government policy fund injection or a large-scale electricity rate hike is inevitable. As external financing options are limited, the need to secure cash internally through electricity rate increases is growing, making a wider scope of electricity rate hikes unavoidable."
Meanwhile, according to the Ministry of Trade, Industry and Energy, the outstanding balance of KEPCO bonds (about 72 trillion won) at the end of this year is expected to exceed the current legal issuance limit (about 40 trillion won, twice the sum of capital and reserves).
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