The government’s plan to set up a corporation to operate a new high-speed KTX railway route is reigniting controversy over the privatization of the state-run rail operator KORAIL.

KORAIL’s labor union has threatened to stage a walkout from Monday, protesting the government’s decision to establish an affiliate under KORAIL to deal with new KTX routes connecting southern Seoul to the nation’s southern regions from 2015.

The union suspects that the plan to set up a subsidiary under KORAIL is a step toward privatizing the rail operator in the future.

“Should this new company fail to secure sufficient public funds, it will end up finding itself new shareholders in the private sector, which will eventually lead to privatization,” said union leader Kim Myung-hwan last week.

The fierce backlash of the union followed the announcement by the Ministry of Land, Infrastructure and Transport that it will establish a corporation to manage the operation of the Suseo KTX railway.

Government officials said the measure largely reflected social concerns over the monopoly of the state-run KORAIL and the resulting lack of market competitiveness.

To ease the privatization concerns, the government limited the shareholder qualification to KORAIL and public funds. Also, the quota of the state rail operator was increased from the conventional 30 percent to 41 percent.

“If it achieves a management gain, KORAIL may raise its share every year up to 100 percent,” said a ministry official, claiming that the renewed plan would end all privatization controversies.

But union members rebutted the claims, saying that major state funds such as the National Pension Service had earlier refused to invest in the new KTX line and that the non-KORAIL shares are much likely to be handed over to private holders.

The KORAIL labor-management has held a series of negotiations to avert the strike move, but failed to narrow their differences as of Sunday evening.

Land Minister Suh Seoung-hwan, while pledging to provide with alternative transportation means in case of walkout, said that strict measures will be taken against the “unlawful” strike.

“The government has no desire to privatize the railway,” Suh said at the parliamentary special committee on budget and accounts last week.

The plan to separate the operation of the new rail route was a compromise to introduce competition in the rail business while minimizing the privatization disputes, the minister said.

But the plan for a new KTX operator is developing into a political issue as opposition parties began to attack the Park Geun-hye administration for what they claimed was a secret effort to privatize the country’s transportation system.

“The establishment and investment related to the Suseo KTX railway is the prelude to a phased privatization of the country’s railroad, as well as a breach of (President Park Geun-hye’s) election pledges,” said Rep. Woo Won-shik, a member of the opposition Democratic Party’s top decision-making Supreme Council.

The ruling Saenuri Party has refrained from speaking out but it earlier supported the ministry’s plan to split the railway management and to establish a new operating company.

By Bae Hyun-jung (tellme@heraldcorp.com)