KEPCO Sets 20 Trillion KRW Financial Improvement Goal Over 5 Years... Tightening Its Belt

[Asia Economy Sejong=Reporter Dongwoo Lee] Korea Electric Power Corporation (KEPCO) and its power generation subsidiaries plan to implement financial soundness measures worth 3.3 trillion KRW this year and 20 trillion KRW over the next five years.

According to the energy industry on the 4th, KEPCO held an emergency management meeting yesterday at the KEPCO Art Center with the presidents of 11 power group companies, including Korea Hydro & Nuclear Power, and the power generation subsidiaries Namdong, Jungbu, and Seobu Power, to review the financial soundness goals and implementation status.

Jung Seung-il, President of Korea Electric Power Corporation, is speaking at the '2023 1st Power Group CEOs Meeting' held on the 3rd at the KEPCO Art Center in Seocho-gu, Seoul. (Photo by Korea Electric Power Corporation)

Last year, KEPCO and the power group companies reported financial improvement results of 5.5 trillion KRW, approximately 167% of the target (3.3 trillion KRW). The cost savings from reducing power purchase expenses and business promotion expenses amounted to 3.1 trillion KRW, and investment cost reductions through new construction methods and flexible planned preventive maintenance totaled 1.8 trillion KRW. Including these, they plan to pursue a total of 20 trillion KRW in financial soundness over five years until 2026 (KEPCO 14.3 trillion KRW, group companies 5.7 trillion KRW). They aim to secure 2.9 trillion KRW through asset sales and 1.1 trillion KRW through revenue improvement, while saving an additional 5.6 trillion KRW and 3 trillion KRW respectively through business adjustments and cost reductions.

They also aim for capital expansion of 7.4 trillion KRW through reappraisal of owned real estate assets such as land and office buildings. KEPCO achieved financial improvement results worth 3.8 trillion KRW, including securing 460 billion KRW in cash liquidity through real estate asset sales. For example, the remaining site of the Uijeongbu substation, which had an appraisal price in the low 100 billion KRW range, was sold for 294.5 billion KRW?about three times higher?by introducing for the first time a 'proposal contest-type sale method' that evaluates not only the bid price but also future development plans. Namdong Power recovered 28.9 billion KRW exceeding the initial investment cost through a paid-in capital reduction in its Bulgarian solar power project.

KEPCO and the power group companies plan to generate financial structure improvement effects worth 3.3 trillion KRW this year through asset sales (1.7 trillion KRW), business adjustments (1 trillion KRW), cost reductions (300 billion KRW), and revenue expansion (300 billion KRW). Alongside this, they will strengthen export momentum for new energy businesses such as nuclear power, hydrogen, and offshore wind power, and promote full-cycle package deals for power business to create opportunities for joint overseas expansion with domestic private companies and power group companies.

In the hydrogen business, KEPCO, power group companies, and private enterprises will establish a cooperative system to pioneer the still early-stage global hydrogen market. For offshore wind power, they will simultaneously pursue strategic collaboration with global leading companies and domestic demonstration projects. In the nuclear power sector, leveraging the timely completion of the UAE nuclear power plant, they aim to secure 'second nuclear power plant' orders in T?rkiye and the United Kingdom.

KEPCO recorded a deficit of 21.8 trillion KRW up to the third quarter of last year, and the deficit on a separate basis is estimated to reach 34 trillion KRW by the end of this year.