KEPCO may face blame for Yeosu fiasco

By Kang Seung-woo

A power failure at a major industrial complex in the southern part of Korea has put a question mark over the Korea Electricity Power Corp. (KEPCO)’s plan.

A 20-minute blackout on Monday afternoon forced GS Caltex to close most of its plants at the complex, which is believed to have cost at least 30 billion won ($27 million), according to the nation’s No. 2 oil refinery.

“The same kind of problem has occurred periodically at the nation’s industrial complex and it does not make sense,” an official of a local oil refinery industry said on condition of anonymity.

The complex also suffered power failures in 2006 and 2008.

As soon as the blackout happened in Yeosu, South Jeolla Province, KEPCO, the nation’s lone power supplier, released a statement defending itself, claiming that the blackout was unrelated to the system of power supply and demand at the complex, and went on to blame GS Caltex for the disruption. GS countered, calling KEPCO’s claim nonsense, which has turned into a blame game over the cause of the power failure.

The nation has another large-scale industrial complex, which houses two major oil refineries ― SK Energy and S-Oil, in Ulsan, North Gyeongsang Province. Hyundai Oilbank, the last of the “big four” refineries is located in Daesan, South Chungcheong Province.

Despite its older history, Ulsan has not suffered as big a power outage as Yeosu, according to the industry.

KEPCO said that there is no difference in the two industrial zones in terms of its system to provide electric power, refusing growing speculation of its mismanagement in the often-troubled complex.

“Ulsan as well as Yeosu also suffers power outages and the facilities in both areas are the same,” said a KEPCO official.

KEPCO also said that if its systems at the complex need some reinforcement, it will carry it out.

Despite the state-run agency’s claim, its words could be hollow as KEPCO has not displayed a solid performance in profitability.

It registered a loss of 2.95 trillion won in 2008 and 77.7 billion won in 2009.

The industry says that it is tough to take a blackout case to court due to its prominent position.

“As KEPCO is the nation’s lone power supplier, it is not easy to take legal action against the monopoly operator of electricity for future relationships,” the official said.

“I have no clue how the power outage happened, but KEPCO usually plays a key role in analyzing the cause of failures, so figuring out who is responsible for the mess will be a tall order for GS Caltex and other companies located in the complex.”

No firms who suffered from previous power failures in 2006 and 2008 filed a lawsuit.

In the case of a sudden power outage, which can trigger damage amounting to tens of billions of won like the case of GS, the nation’s large firms are preparing themselves against such incidents.

Samsung Electronics, the world’s largest maker of memory chips and liquid-crystal display (LCD) panels, has its own power supply and generators to deal with a possible power failure and prevent it from hurting its semiconductor production, while POSCO, the world No. 3 steelmaker, has its own power plant which can produce 80 percent of the necessary electricity in the case of disruptions.