South Korea’s state power companies are projected to register 1.3 trillion won ($1.17 billion) in combined losses this year due to the nation’s anti-coal drive and low electricity prices.

According to budget plans submitted by five subsidiaries of Korea Power Corp. on Tuesday, the Korea South-East Power, Korea Midland Power, Korea Southern Power, Korea East-West Power and Korea Western Power are expected to record net losses of between 230.8 billion won and 350 billion won.

The bleak projections are in line with an erosion in profitability amid the national anti-coal push and a record fall in electricity prices due to the pandemic.

Starting this year, coal-fired power plants are recommended to meet their greenhouse gas reduction targets by limiting their operations on a voluntary basis. From next year, this anti-coal policy is expected to become mandatory.

For the five state power firms, which depend heavily on coal, the measure is set to deal a further blow to their profitability. Since 2019, the government forced coal-fired power plants to shut down or limit their operations from December to March to mitigate air pollution.

On top of anti-coal regulations, low electricity prices are to weigh down on the company’s bottom line. According to them, this year’s average electricity purchasing price will likely hit a 14-year-low of 66.09 won per kilowatt-hour.

By Kim Byung-wook (kbw@heraldcorp.com)