Kim Dong-cheol, the newly appointed head of Korea Electric Power Corp. (KEPCO), on Wednesday urged the necessity of “normalizing” electricity rates and implementing a comprehensive restructuring of the ailing state-owned utility. The former four-term lawmaker spoke as he assumed the top post of the company struggling with mounting losses.
At a ceremony held at KEPCO’s headquarters in Naju, South Jeolla Province, Kim remarked, “Our primary mission is to address the current financial difficulties. It is essential to adjust electricity rates, particularly in light of rising international oil prices and a stronger U.S. dollar.” He added, “Energy rates below production cost could lead to an increase in energy imports and exacerbate the trade deficit.”
As of the end of June, KEPCO’s total debt had reached 201.4 trillion won (US$151.49 billion), the highest of any South Korean listed firm. Last year, the company experienced a record-breaking operating loss of 32.63 trillion won, more than four times the amount from the year before, due to the government’s failure to raise electricity rates enough to cover increasing costs in the face of high inflation, as well as the economic downturn and public burdens resulting from the COVID-19 pandemic.
Kim also stressed the need to create new revenue sources to reduce the company’s dependence on electricity bills. “We must generate more than 30 percent of our total revenue from fields other than domestic electricity sales,” he said. “Given this dire crisis, KEPCO must move forward with a firm determination to completely revamp the company.”
The CEO proposed various long-term development strategies, such as the development of advanced technologies in new energy fields, the creation of a comprehensive platform offering various services to related companies, the expansion of offshore wind power and other renewable energy projects, and the promotion of exports of nuclear power plants.
To tackle debt issues, KEPCO has pledged to implement a set of reform measures, including property sales, restructuring overseas businesses, and freezing employee wages.