Debt-ridden KEPCO announces intensive self-rescue measures

[Photo by Lee Chung-woo]

The state-run Korea Electric Power Corp. (KEPCO) plans to downsize its workforce and sell stakes in some of its subsidiaries as it undergoes its largest-ever organizational restructuring to cope with mounting debt that has exceeded 200 trillion won ($152.5 billion).

“We will implement extraordinary self-rescue measures, including organizational innovation, workforce efficiency, and additional asset sales,” said Kim Dong-cheol, chief executive officer of KEPCO, on Wednesday.

The latest effort is part of the additional measures sought under the 25.7 trillion won self-rescue plan unveiled by the utility firm in May.

Under the measures, KEPCO plans to sell the 640,000-square-meter site of its human resources development facility in Gongneung-dong, northern Seoul.

KEPCO plans to first seek a change in land use for the site, which currently consists of 99.3 percent natural greenery, to enhance its asset value before proceeding with the sale.

However, the completion of the sale is expected to take some time, as preliminary steps, such as dismantling research reactors and relocating 154 kilovolt of high-pressure underground transmission lines, are necessary.

KEPCO also plans to divest its 20 percent stake in KEPCO Knowledge, Data & Network Co. (KEPCO KDN), a fully-owned subsidiary specializing in information, communications, and technology services.

Furthermore, KEPCO aims to sell its entire 38 percent stake in the Calatagan solar farm project in the Philippines.

KEPCO anticipates strong interest from investors in the solar farm stake as it brings stable dividend income and involves limited sales restrictions. The estimated value of the stakes is approximately 50 billion won.

KEPCO’s self-rescue plan also includes an efficiency measure that focuses on reducing the organization by 20 percent.

The downsizing will result in a restructuring from the current eight headquarters and 36 divisions to six headquarters and 29 divisions.

The plan will encourage executives at the second-tier level and above to return half of the next year’s wage increase and consider voluntary retirement.

Despite the efforts, however, some critics believe that these measures are still insufficient to address the ever-growing deficits, especially considering that the increase in electricity tariffs for the fourth quarter has been limited to industrial use.