Public Enterprises Including KEPCO Expected to Incur Losses of 6.7 Trillion Won

[Asia Economy Reporter Jusangdon] Korea Electric Power Corporation and its six power generation subsidiaries are expected to record a net loss of about 4 trillion won this year, while Korea Railroad Corporation and Incheon International Airport Corporation, hit hard by the COVID-19 pandemic, are also expected to post net losses reaching 2 trillion won.

According to the medium- to long-term financial management plan for public institutions recently submitted by the government to the National Assembly on the 12th, 15 public enterprises and quasi-governmental institutions are projected to record a total net loss of approximately 6.6787 trillion won this year.

The public institutions expected to run deficits this year include Korea Electric Power Corporation (KEPCO) and its six subsidiaries?Namdong, Nambu, Jungbu, Seobu, Dongseo Power Generation, and Korea Hydro & Nuclear Power?as well as Korea Railroad Corporation, Incheon International Airport Corporation, Korea National Oil Corporation, Korea Sports Promotion Foundation, Korea Coal Corporation, Korea Resources Corporation, Incheon Port Authority, and Korea Industrial Complex Corporation.

The scale of deficits for these 15 companies will double from last year's 3.3993 trillion won. This is largely due to KEPCO and its six power generation subsidiaries.

KEPCO, which posted a net profit of 1.9515 trillion won last year, is expected to incur a net loss of 3.2677 trillion won this year. The six KEPCO subsidiaries?Korea Hydro & Nuclear Power, Namdong, Nambu, Jungbu, Seobu, and Dongseo Power Generation?recorded a total net profit of 332.9 billion won last year but are expected to post a net loss of about 757.5 billion won this year.

The sharp decline in the performance of KEPCO and its affiliates is due to the sharp rise in raw material prices such as crude oil and thermal coal, which are the fuel sources for power generation, this year. Although fuel costs were linked to prices, electricity rates were frozen in the second and third quarters of this year due to the COVID-19 pandemic.

Korea Railroad Corporation expects railway demand this year to be only 74% of that before the COVID-19 outbreak in 2019. Incheon International Airport Corporation’s deficit is projected to nearly double from 422.9 billion won last year to 832 billion won this year.