[Exclusive] Public Institutions Increasing Budgets with No Use After Purchasing Drones Worth Tens of Millions Won (Comprehensive)

Government-Supported Public Institution Budget Hits 108.8 Trillion Won... Surges by 32.3 Trillion in 3 Years

[Sejong=Asia Economy Reporters Haeyoung Kwon, Sunhee Son] Korea Southern Power introduced two drones costing 16 million won in August 2017 to inspect wind power facilities in Jeju. The purpose was to use drones to reduce blind spots in inspecting wind turbine blades, which are difficult to access on site. However, over the past four years, these drones have been used only once. Korea Electric Power Corporation (KEPCO) also purchased a 33 million won drone in September 2020 to inspect transmission and distribution facilities in Incheon but did not use it even once in a year. Although energy public enterprises bought drones costing tens of millions of won each, the usage frequency was extremely low, resulting in wasted money.

According to data submitted on the 25th by Rep. Geumhee Yang of the People Power Party from major energy public enterprises, five companies including KEPCO, Korea Gas Corporation, and Korea South-East, Southern, and East-West Power have purchased 26 drones costing over 5 million won each, spending a total of 815.52 million won so far. However, drone usage records show that it was not uncommon for drones to be operated less than once a year.

KEPCO’s Equipment Diagnosis Department introduced a drone costing 8.67 million won in 2018 but used it only once each in 2019 and 2020, and twice this year. Korea Gas Corporation’s headquarters never used a 10 million won drone introduced in Jeju in 2018. Korea South-East Power introduced a 5 million won inspection drone at the Samcheonpo Power Plant in 2015 but conducted a test flight only once in 2021, six years later.

Despite such cases of budget waste by public enterprises, government budget support for public enterprises and public institutions has steadily increased. Especially after the COVID-19 pandemic, relying on an ‘expansionary fiscal policy,’ the budget has surged by more than 10 trillion won annually since 2019. Ahead of next year’s budget review, there are calls for urgent total volume management of the increased public institution budgets.

According to the National Assembly Budget Office’s “2022 Public Institution Budget Focus Analysis” report, the government support budget for public institutions next year is 108.8 trillion won. This is an increase of 32.2 trillion won in just three years from the 2019 budget of 76.6 trillion won before the COVID-19 crisis. During the same period, the share of public institution budgets in total government expenditure rose from 15.8% to 18% (based on the main budget). The government’s total expenditure growth rate has been steep over the past three years due to COVID-19 crisis response, but the public institution support budget has increased even faster, raising its share. Including two supplementary budgets executed this year, the share of public institution support budgets reaches 19%. At this rate, surpassing 20% is expected soon.

President Moon Jae-in reaffirmed the expansionary fiscal policy in his budget address to the National Assembly, emphasizing the significant fiscal role next year as well. Professor Kibaek Park of the Taxation Department at the University of Seoul advised, “When expansionary fiscal policies are implemented, government money may be regarded as ‘blind money’ and not properly utilized. It is necessary to establish a system that not only legally defines eligibility for receiving funds but also strengthens management and supervision.”