New Minister of Knowledge Economy Choi Joong-kyung Thursday reaffirmed the government’s intent to intervene in the local refining market to contain the recent petrol price hike.
“The profit margins of local oil companies are 3 percent, even after giving out salaries. Considering that they do not have many other costs, the figure is not at all small compared to those of other manufacture industries,” Choi told reporters.
This counters the assertion of local oil firms ― SK Innovation, GS Caltex, S-Oi and Hyundai Oilbank ― that they cannot reduce supply prices due to small margins.
Choi referred to the state of the country’s refining industry as a natural monopoly, as having few refiners is inevitable for the small country.
The government’s intervention in such an industry is thus generally considered economically acceptable, he said.
Choi added that he will himself figure out the components for and calculate the production cost of petrol products in the country as soon as he receives required materials from a pan-governmental task force launched to probe the issue.
The minister meanwhile said the carbon trading scheme will not likely be adopted in the country as planned in 2013, due to the absence of a viable formula that can cope with speculation, technology advances and individual market conditions.
Carbon trading requires companies to release emissions above a government-imposed cap and to purchase extra credits from those that discharge below their quota.
“There is a need to carefully examine what kind of side effects a carbon trading system will have and see if it can be effective in reducing emissions levels,” he stressed.
Regarding the criticism that Seoul provided excessive financial support for the 2009 nuclear power plant project in the United Arab Emirates, Choi said that it is an established practice to tie large construction deals with financing.
Korean companies will build four commercial reactors in the Middle Eastern country by 2020 for the project worth $18.6 billion won.
The ground-breaking ceremony for the that nation’s nuclear reactors will be held in March, Choi said, adding that the event has been delayed due to the UAE king and crown prince’s schedule.
By Koh Young-aah (
youngah@heraldcorp.com)
