As instability in the Middle East has heightened uncertainty in energy prices and supply, the Democratic Party of Korea discussed domestic response measures such as reducing the use of liquefied natural gas (LNG) and increasing the operating rate of nuclear power plants. The plan is to move up maintenance schedules for nuclear plants and raise the operating rate from the high-60% range now to about 80%.
The Democratic Party of Korea's Middle East crisis economic response task force (TF) held its second meeting at the National Assembly on the 16th and discussed domestic response measures to the government and the Middle East crisis. Meeting with reporters right after, Rep. Ahn Do-geol, who serves as TF secretary, said, "Preemptive management of LNG supply is needed," and noted, "We decided to adjust the energy production mix by increasing coal and nuclear generation and reducing the share of LNG generation."
The government decided to ease the LNG generation cap starting today. Rep. Ahn said, "The Ministry of Trade, Industry and Resources decided to abolish, as of today, the LNG generation cap that had been maintained at 80%," adding, "The intent is to allow more flexible adjustment of power production in light of the energy supply situation."
Plans are also being pursued to raise the operating rate of nuclear power plants to secure power supply. Rep. Ahn said, "We will complete maintenance on two units by March and the remaining four by mid-May, and sequentially operate a total of six nuclear units," adding, "With this, we finalized a plan to raise nuclear utilization from the high-60% range now to about 80%."
Ahn also said, "Shortages of key raw materials such as aluminum, sulfur and naphtha are in a serious situation," and added, "In consultation with the Ministry of Trade, Industry and Resources, for naphtha we will freeze exports of domestically produced volumes at last year's level and push measures to secure alternative import sources." He went on, "We are also reviewing a plan to elevate the Yeosu petrochemical industrial complex area to a special industrial crisis response zone."
A supplementary budget proposal was also discussed at the meeting. Rep. Ahn said, "(The party and government) reached a consensus that an urgent supplementary budget is needed to stabilize energy supply and help with livelihood recovery," adding, "As downward pressure on the economy has been increasing recently, there is shared recognition that a supplementary budget is needed as a preemptive response."
Ahn said, "The supplementary budget is expected to include measures to stabilize energy supply and support livelihoods," and noted, "Major items under review include compensating refiners for losses stemming from the maximum fuel price scheme and expanding investment and loan support for an energy transition centered on renewable energy."
He added, "Plans to ease the burden of fuel costs and to provide energy vouchers for low-income people and small business owners were also discussed," and said, "Logistics support for corporations experiencing export disruptions due to the Middle East crisis may also be included in the supplementary budget bill."
Regarding talk in some quarters of a supplementary budget of 10 trillion to 20 trillion won, Rep. Ahn said, "That simply stems from the general view that this year's excess tax revenue will be about 15 trillion to 20 trillion won; it does not mean the actual supplementary budget size has been fixed within that range." He continued, "The Ministry of Planning and Budget is currently working with relevant ministries to identify and review expenditure needs to be reflected in the supplementary budget," adding, "Only after comprehensively reviewing expenditure requirements, available resources and urgent policy needs will the specific size of the supplementary budget be decided."