The state-run Korea Electric Power Corp., the nation’s monopoly power grid company, is making all-out efforts to reduce its 55 trillion won ($52 billion) in debt.
“The efforts include sales of not only non-core but also core assets at home and abroad,’’ a KEPCO official said Monday.
The move came after the Ministry of Strategy and Finance in early December called on companies including KEPCO to take bold measures to reduce their debt. The ministry is responsible for the structural reform of state-run companies.
KEPCO’s debt has continued to rise over the past five years due in part to over-investment in overseas resource development projects promoted by the previous government and the continued government control in raising the cost of electricity.
Without efforts to lower the debt level, KEPCO’s debt-to-equity ratio, which currently stands at 133.2 percent, will continue to rise and will exceed 200 percent by 2017, according to the ministry.
In response to the ministry’s request, KEPCO CEO Cho Hwan-eik said that the firm will lower its debt-to-equity ratio to 150 percent by 2015 through a cost-saving initiative and by restructuring non-core and core assets.
KEPCO’s core assets under review for sales include the utility firm’s head office, located across from the Trade Center in Samseong-dong, southern Seoul, and stakes in overseas uranium mines, the official confirmed.
The head office of KEPCO will be auctioned off next year as the company will be relocated to Naju, South Jeolla Province, in November 2015 in line with the government’s plan to relocate more than 100 state-run companies in the capital area to local cities by 2016.
The utility giant is also considering selling core overseas assets to lower its debt level.
“The company is reviewing sales of a 9.46 percent stake in Canadian uranium miner Denison,’’ the KEPCO official said. KEPCO paid 63 billion won for the stake in the company back in 2007.
KEPCO’s swift debt reduction measures through selling core assets, however, are drawing concern over the outflow of national wealth.
The Energy Ministry, however, dismissed these concerns, saying Monday that the current law gives priority to domestic firms over foreign investors in taking over state-owned assets.
By Seo Jee-yeon (email@example.com