Introduction

North Korea’s energy sector was unable to break away from the decades-long dysfunction and remained stuck on the same track in 2019. Indeed, UN sanctions restricted the flow of coal and oil, and severe drought significantly diminished the generation of hydropower despite an increase in the generation capacity of thermal power plants.

The energy supply in 2019 appears unchanged from 2018. Although shortfalls in operating capital due to the export embargo exacerbated conditions in the coal industry, production remained similar to the previous year, with an increased supply to thermal power plants and some exports of coal through ship-to-ship transfers. It is also presumed that the supply of petroleum products was maintained, preventing chaos in an already unstable domestic market. Estimates indicate that, when compared to a normal year, crude oil imports from China remained almost the same as did that of refined oil through illegal ship-to-ship transfers. In the electric power sector, hydropower generation decreased due to the spring drought but total power generation grew slightly year-on-year as thermal power generation expanded on the increased capacity at Pukchang Thermal Power Plant.

There were several noticeable changes in North Korea’s energy policy including the expansion of power generation; restructuring of the electricity billing system and; increase in the state smuggling of energy, among others. It is understood that the first phase construction of the large hydropower plant, Dancheon Hydropower Plant, was actively undertaken and that of small- and medium-sized plants continued steadily at multiple sites. The restructuring of the electricity billing system was implemented differently in the capital and rural regions. In Pyongyang, watt-hour meters were distributed and the electricity billing system shifted to one that is measured by usage. Meanwhile, in local areas, taking into account the increased use of home appliances due to the dissemination and expansion of solar panels, the billing system was restructured to reflect the status of appliance ownership. As a consequence of the sanctions, the private smuggling of energy by donju (private investors) and individuals was replaced by state smuggling by government agencies, trading companies and military bases who collude with donju. Accordingly, the smuggling-in of petroleum products and the smuggling-out of coal continues to this day.

The dire and protracted situation in the North Korean energy sector has shown little progress despite multilateral efforts by the regime; and this is expected to continue. It is unlikely that North Korea alone will be able to find its way out of the current difficulty. The future supply of energy will be determined by the sanctions imposed by the international community rather than the policy efforts of the North Korean government.

* This article is part of 2019 The DPRK Economic Outlook

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