Only Conglomerates Participate in Privatization of KEPCO

The government is likely to restrict domestic candidates for the takeover of the subsidiaries of Korea Electric Power Corp. (KEPCO) to large companies who are already engaged in the energy business.

An official of the Ministry of Commerce, Industry and Energy (MCIE) told that ``As long as the large companies participate in the privatization of the KEPCO in order to strengthen their core competency, the exception to the restriction on conglomerates’ equity in subsidiaries on the Fair Trade Act will be applied``.

Hence, LG, SK, POSCO, Daesung Industrial Co., Samchully, etc. who already launched the energy industry are likely to participate in the privatization of the subsidiaries of the KEPCO, on their own, by forming the consortium, or in collaboration with the foreign companies.

The MCIE will also allow the participation in the privatization of the KEPCO for the companies who are not under the restriction on conglomerates` equity in subsidiaries, or raise the fund by selling other subsidiaries. But because the asset scale of one subsidiary of the KEPCO amounted to 3-4 trillion won, the large companies who can secure above 2 trillion won necessary to acquire the right of management will be advantageous.

Meanwhile, 5, 6 major foreign energy companies such as Tractebel, Shell and El Paso are also said to be interested in the sales of the subsidiaries of the KEPCO.

The MCIE decide to review its original plan to privatize one of KEPCO`s five affiliates next February, selling its stakes through a competitive bidding process after listing in the stock market, and to determine the sales of the remaining four affiliates step by step according to the result of the first plan.

An official of the MCIE told that ``There`s no change in the basic privatization plan, but we need to thoroughly examine the buyers and the method of privatization considering the situation of the stock market and the national sentiment``. The power generation industry of the KEPCO was divided into 5 thermoelectric power firms and 1 nuclear power firm on April 2. And among them, only thermoelectric power firms will be privatized.

Kim Sang-Chul sckim007@donga.com