By Kim Tae-gyu
Staff Reporter
After recording multibillion dollar deficits last year amid the financial crisis, the Korea Electric Power Corp. (KEPCO) has rebounded, chalking up a huge profit midway through this year.
KEPCO posted 3.6 trillion won ($2.9 billion) in operating deficits last year and 1.8 trillion won losses over the first quarter of 2009. But the state monopoly bounced back in the third quarter to rack up 1.6 trillion won in operating profits.
Despite the quick turnaround, KEPCO's high-profile CEO Kim Ssang-su might not be entirely pleased, given that the utility company might be pressed not to raise its electricity prices.
``Although Kim vowed of late that KEPCO needs to jack up the electricity rates, it might not do so soon as it posted the huge profits over the third quarter,'' Daewoo Securities analyst Shin Min-seok said.
In addition, KEPCO already cranked up electricity charges twice during the past year amid snowballing deficits ― 4.5 percent last November and 3.9 percent in June.
Should it increase the rates again, it will mean electricity prices will jump into the double digits next year. This is expected to cause public uproar because KEPCO is now a profitable business.
Although it is currently making money, KEPCO needs to generate a much more substantial amount if it wants to build new facilities such as ultra-expensive nuclear power plants.
``KEPCO is expected to keep the balance in the black for this year by netting around 300 billion won in profits. But that is not sufficient. It has to record more than 2 trillion won in profits,'' Park said.
KEPCO concurs, as does its CEO Kim, who said the electricity rate should be raised when he was asked by a lawmaker early last month during the annual parliamentary inspection.
``The 3-trillion-won profits per annum are a minimum must for us in order to continue the expensive facility investment. You should also take into account the fact that our cost to generate electricity jumped from 11 trillion won in 2007 to 16 trillion won last year,'' a KEPCO official said.
In this climate, market watchers have said that KEPCO CEO Kim is currently facing a crucial juncture, where he needs to show off his stewardship.
``Kim has been second to none whenever he has been a supporter of a boss. But as a chief executive, he has yet to prove his value. Hence, it attracts attention how he will grapple with the electricity rate problems and boost KEPCO to be a better company,'' said a Seoul analyst, who asked not to be named.
Kim started his professional career at LG in 1969 and worked as an engineer at regional factories over the next three decades. He first moved to the LG head office in Seoul in 2003 when he took charge of LG Electronics.
He carried out a set of innovative projects to catapult LG Electronics but failed to achieve outstanding results. He took the helm of KEPCO last year.