In an effort to reduce their excessive debt rate and alleviate the government’s subsidy burden, major public corporations are making moves to increase public utility fees such as water and electricity rates.
This, however, not only triggered concerns of inflation but also raised suspicions that the state-run companies may be shifting their fiscal responsibility to the public.
In its mid- and long-term financial management plan submitted to the National Assembly on Thursday, the government pledged to hike the public utility fees as to match the level of production cost.
According to the National Assembly Budget Office, the gross income of the top five public utility fees ― electricity, gas, water, highway, railway ― remained in the red in 2006-2011.
In order to make up for the current deficits, the government has to increase electricity fees by 12.6 percent, gas fees by 12.8 percent, and water fees by 18.5 percent, according to officials. The highway tolls and railway fares should be edged up by 18.3 percent and 23.8 percent, respectively.
The Korea Expressway Corp. will thus downscale its highway toll exemption system and may even charge all sections of Seoul Ring Road, a major expressway circling the metropolitan area.
The Korea Electric Power Corp. and the Korea Water Resources Corp., too, suggested raising their fees in phases.
Such cost-saving and fee-hiking efforts are also expected to reduce the huge amount of accumulated debt, which has caused the public organizations to heavily rely on government support over the past years, officials said.
The state-run rail operator KORAIL topped the list with s 445 percent debt ratio, and was followed by the Korea Gas Corp. with 338 percent.
The government has vowed to reduce the average debt ratio of its 41 major public companies, from 244.6 percent down to 210.5 percent by the year 2017.
The state-run companies, in response, promised to cut down on their investment businesses, to sell out non-crucial assets and to increase capital by issuing new stocks.
The public fee hike plan, however, faced public criticism that it will fan inflation and the public companies are trying to pass the buck of their debt burden to citizens.
Some civic groups said public firms should first try to cut salaries of their CEOs and workers before raising utility fees.
According to the data submitted by K-water to the parliament, the annual salary of its president has increased by 42 percent and that of its executive members by 27 percent over the past four years.
The performance-based bonus also escalated to 225 percent during the period, whereas the company was left with 11 trillion in unresolved debt, data showed.
