Fitch: Tax raise eases pressure on Kogas

Fitch Ratings commented that the South Korean government's plans to raise the city gas tariff and reactivate the fuel cost pass through mechanism should ease financial pressure for Korea Gas Corp. (Kogas), which is rated A+ with a stable view.

As the agency said it rates the company on a top-down basis, reflecting its strong linkage with the Korean government, the rating already incorporates an enhancement to the stand-alone credit profile and therefore news of the tariff does not have any impact on the existing ratings of Kogas.

The tariff hike should help the company reduce its other receivables associated from the temporary suspension of the fuel cost pass through mechanism, Fitch said.

The reactivation of the fuel cost pass through mechanism is also expected to help stabilize its stand-alone credit metrics and improve the transparency of its tariff structure, the agency said.

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