The domestic price for liquefied petroleum gas will be raised on a gradual basis starting next year. In particular, LPG for the purpose of transportation is expected to record the highest increase with 69% by 2002.
However, the government plans to offer subsidies to handicapped people, people with national merit and transportation businesses, as they would be hard hit by the projected price hike.
The Ministry of Commerce, Industry and Energy reported that it would work out such an energy price structure plan and finalize it after holding a public hearing Aug. 31.
The plan calls for adjusting the price ratio among gasoline, light oil and LPG from 100-49-28 to 100-54-37 in 2001 and 100-60-47 in 2002.
On the basis of the gasoline price of 1,299 won per liter as of the end of August, the LPG price will rise 33% from the current 360 won to 480 won next year and will further rise to 610 won in 2002. So it will rise by as much as 69% over the next two years.
The government intends to raise the price for oils for household use to the minimum extent by 2002 and won`t raise the prices for LPG and liquefied natural gas for households.
Also, industrial heavy oil price will be slightly increased, while LNG for industrial use will not see a price increase.
The tax revenue from the energy price hike is estimated at about 5 trillion won. Of the total, 4 trillion will be used as subsidies for those who will be hit by the price hike. For bus, taxi and truck companies, the money collected through the price hike will be returned through reimbursement of local travel fees. And people with disabilities and with national merit will get subsidies from the government.
The ministry said that the energy price eventually will be adjusted to the ratio of 100-75-60, as in most Organization for Economic Cooperation and Development member countries, through a second-step hike after 2003.