The government will partially open the nation’s state-controlled energy supply market to the private sector, as part of comprehensive restructuring plans for public firms accused of inefficient management and high debt levels, officials said Tuesday.
In a workshop meeting led by President Park Geun-hye, chiefs of state firms also vowed to reduce non-core work and list a total of eight power suppliers to attract fresh funds and improve management transparency.
“We need to look at whether public organizations are focused on their key work and (if necessary) should reduce or abolish unnecessary functions,“ said Park at the meeting held at the Government Complex in Seoul.
The major part of the plan is to open areas monopolized by pubic organizations to the private sector.
First, the government will relax regulations on electricity sales by Korea Electric Power Corporation -- the nation’s largest electric utility -- and gradually open the market to the private sector. This indicates that it will allow renewable energy entrepreneurs in solar power and energy storage to supply electricity directly to consumers.
The imported liquefied natural gas market dominated by Korea Gas Corporation will also be opened up to the private sector. The government said it planned to lower the price by bringing private companies such as POSCO, GS Energy and SK E&S into the market.
Apart from the market opening, eight energy companies -- including Korea Hydro & Nuclear Power Co., and Korea Electric Power Knowledge Data Network -- and five power companies -- including Korea South-East Power Co. -- will gradually be listed from the first half of next year.
The listing will be done in the way that the government holds more than 51 percent of their shares and sell 20 to 30 percent to the market. As to Korea District Heating Corp., whose debt ratio is 181 percent, is expected to increase capital by issuing new stocks to improve its financial structure.
The government also announced its plan to shut down struggling public organizations or reduce noncore sectors. Korea Coal Corporation, which has long suffered from impaired capital, will be effectively shuttered through gradual cstaff reductions. Korea National Oil Corporation will slash 30 percent of its employees by 2020 and Korea Resources Corporation will reduce its overseas resource development function gradually.
In the process, around 3,500 employees are expected to be either reassigned or lose their jobs.
By Shin Ji-hye (shinjh@heraldcorp.com)