Cheong Seung-il (R), chief of South Korea’s state-run utility Korea Electric Power Corp. (KEPCO), attends a meeting at the company’s headquarters in Naju, South Jeolla Province, southwestern South Korea, on May 12, 2023. (Yonhap)
SEOUL, May 12 (Korea Bizwire) — The chief of South Korea’s state-run utility Korea Electric Power Corp. (KEPCO) offered to step down Friday, taking responsibility for snowballing losses, as the company announced a set of self-rescue measures meant to address financial woes caused mainly by limited hikes in electricity rates.
KEPCO President and CEO Cheong Seung-il made the resignation offer before his company put forth additional self-rescue measures that aim to save more than 25 trillion won (US$18.77 billion) over the next five years, including selling a major building in Seoul and freezing wages of ranking employees.
Cheong apologized to the people for causing burdens but asked for public understanding for the “inevitable” rate hikes.
“KEPCO will be operated on an emergency management mode, and all the workers will spare no effort to ensure stable supplies of electricity and to prevent industrial disasters,” Cheong said.
“The delay in the rates normalization will have major impacts on the broader national economy, as it could disrupt stable electricity supplies, cause instability in the overall energy industry ecosystem, and distort the financial market due to the rise in KEPCO’s bond issuance.”
Last year, the company logged a record-high operating loss of 32.63 trillion won, more than quadruple from a year earlier due mainly to high global energy prices and limited hikes in electricity rates amid high inflation and growing economic burdens on the people.
During the first three months of this year, it reported an operating loss of 6.17 trillion won.
KEPCO earlier came up with plans that call for saving 20 trillion won through the restructuring of overseas businesses and property sales, but the ruling People Power Party and the government have demanded stronger reform measures before seeking additional electricity rate hikes.
Under the latest plan, the company said it will sell its building in Seoul’s financial district of Yeouido, along with dozens of buildings owned by the company and its affiliates across the country, and rent part of its art center in southern Seoul and several other properties.
It decided to freeze wages of ranking officials to use the money to support energy-vulnerable groups and begin talks with the labor union to have all the workers join the move.
KEPCO will also adjust plans to construct electricity facilities and streamline its organization structure.
“We will make all-out efforts to swiftly implement the stringent measures, and overcome a financial crisis as early as possible so as to boost managerial efficiency and improve customer services,” KEPCO said in a release.
This photo taken May 12, 2023, shows the headquarters of the state-run Korea Electric Power Corp. in the southwestern city of Naju. (Yonhap)
Also Friday, the Korea Gas Corp. (KOGAS) said it will freeze wages of senior officials and push for a series of cost-cutting measures worth 15.4 trillion won over the five years to come to improve its financial health ahead of the expected hikes in the second-quarter gas rates.
KOGAS had about 11.6 trillion won in uncollected payments as of end-March.
The government failed to raise electricity and gas bills enough to cover high energy import prices.
For the January-March period, the electricity rates were raised by 13.1 won per kilowatt hour (kWh) and gas rates were frozen.
The decision on the second-quarter utility bills was yet to be made after a monthlong delay, though officials say the industry ministry is expected to announce the possible adjustment next week.
About 7 won per kWh was forecast to go up for the second quarter, while KEPCO called for a 51.6 won rate increase this year in a report earlier submitted to the National Assembly.
Global liquefied natural gas prices more than doubled on-year to 1,564.8 won per ton last year, and the price of soft coal spiked to $359 per ton in 2022 from $139.10 a year earlier amid the prolonged Russia-Ukraine war, according to government data.
The price at which KEPCO bought electricity stood at 155.5 won per kWh last year, higher than the unit sales price of 120.51 won.
(Yonhap)
