KEPCO CEO grilled over soaring debts
By Kim Yoo-chul
When LG Electronics head Kim Ssang-su took the reins of the Korea Electric Power Corp. (KEPCO) midway through 2008, the high-profile CEO was expected to boost the performance of the state-run utility.
However, under his stewardship this has appeared to be disastrous ― KEPCO netted more than 4 trillion won in losses over the past two-and-a-half years and its debts shot up to over 32 trillion won.
In this climate, Kim has come under fire and some lawmakers even accused him of ``having recklessly managed’’ the company.
But he doesn’t admit this at all.
``There has been talk over mismanagement. Whenever I hear about it, I get riled,’’ Kim told the annual National Assembly inspection held at the firm’s head office in Seoul, Thursday.
``Since I took over the top job, I have tried to run the company stably.’’
The Seoul-based outfit remained in negative territory for two years in a row. Last year, it posted 77 billion won in losses, after suffering from a net loss of 2.5 trillion won in 2008, according to the Korea Exchange.
Things were worse this year even after the economy rebounded from the global financial crisis ― it recorded around 900 billion won in net losses over the first half.
As a result, its total debts reached 32.8 trillion won as of the end of June and its debt ratio climbed to 125 percent as of the end of last year from 87 percent in 2007.
Despite the disappointing performances, KEPCO opted to give 378.8 billion won in bonuses to its employees. This angered watchers and the issue came to the fore during the parliamentary inspection.
In particular, Rep. Lee Jong-hyuck from the governing Grand National Party (GNP) strongly raised the issue.
``In spite of the deteriorating cash flows, KEPCO jacked up bonuses for its workers. In order to improve its financial health, KEPCO is now discussing with the government to raise electricity rates. This is simply insane,’’ Lee said.
Mismanagement of funding programs with its component suppliers was another issue at the inspection.
Lee Myung-kyu of the GNP said KEPCO has spent a total of 22.5 billion won for this purpose, however, the power company has failed to yield visible results.
A KEPCO spokesman declined to comment.
Separately, the KEPCO CEO said the company has made substantial progress in talks with Turkey on the construction of a nuclear power station.
``KEPCO is planning to form a consortium for the Turkish project., investing the minimum amount,’’ Kim said, adding South Korea and Turkey are set to sign the deal sometime in November.
KEPCO is also seeing chances to construct nuclear plants in India and Malaysia, and is considering South Africa, Thailand, Kuwait and Saudi Arabia as ``future markets,’’ according to the chief executive, who did not elaborate further.