Gov’t Not to Privatize KEPCO affiliates

The government decided to withdraw its plan to privatize major public energy corporations, including the power affiliate of Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. (KOGAS). It is also planning to change the privatization method from a “package process” into a “phased process.”

However, it will continue the privatization process of public energy corporations not closely related to utility fees, including Korea Power Engineering Co. and KEPCO KPS.

The government reached the agreement in a closed-door meeting for crisis management presided over by Minister of Strategy and Finance Kang Man-soo yesterday.

A high-ranking Finance Ministry official said, “We decided to cancel the privatization plan for KEPCO’s power affiliate and KOGAS, which are closely related to utility fees, and are reviewing whether to privatize Korea District Heating Corp.”

He also added, “As a package process of privatization could cause shock waves, we’re planning to carry on the privatization plan in stages, under the leadership of ministries responsible for each public corporation.”

The government also decided to privatize Korea Airports Corporation and Incheon International Airport Corporation, and included the Korea Housing Guarantee Co. in the list of corporations to be privatized. However, it plans to exclude the Korea Appraisal Board from the privatization list, since the board plays a considerable level of public function.

The plan to merge the Export-Import Bank of Korea and the Korea Export Insurance Corp. will also be discarded, since the government concluded that the merger would not create synergies.

Experts believe that such a shift in the government plans is not unrelated to the increasing political burden amid the recent public protests against government policies. The ruling Grand National Party recently said, “Privatization of public corporations are not a priority issue.” Under these circumstances, there are rising concerns that the privatization project, which was one of the core tasks of the Lee Myung-bak administration, might fizzle out.

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