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[Editorial] Senseless decision

Ministry permits loss-making Kepco to open university to fulfill Moon’s pledge

A university approval committee of the Education Ministry permitted Korea Electric Power Corp. on Friday to set up a legal entity to create and manage a university for engineering degrees.

Kepco will proceed with follow-up measures with a goal of opening the university in March 2022, two months before the end of the Moon Jae-in presidency.

The state utility says the new university will develop the world’s most talented energy engineers.

Atomic power is an energy field where Korea’s technological excellence has been globally recognized. But Moon’s nuclear phase-out policy tore down much of the ecosystem of the nation’s atomic power industry and its cultivation of future nuclear engineers. Now, it is pushing to develop the world’s best energy engineers through a new university. It is absurd to try to produce qualified engineers anew after disabling an existing ecosystem that produces them.

Korean universities and colleges already offer a variety of energy engineering disciplines. Graduates who majored in them work in related fields. Besides, Korea has five engineering-specialized universities, including Korea Advanced Institute of Science and Technology and Pohang University of Science and Technology.

Kepco argues that its engineering university will serve a regionally balanced development. But the Chungcheong region has KAIST, the Gyeongsang region Postech, and the southwestern region has Gwangju Institute of Science and Technology. Furthermore, GIST’s energy engineering programs are similar to those planned for Kepco’s university.

Above anything else, Korea is in no position to host a new university. Declines in the school-age population and enrollment put about a quarter of provincial universities and colleges at the risk of shutting down. The Education Ministry has been seeking to downsize universities as a high-priority task. Now the ministry is taking procedures to establish a new university. It is not only unfit for the current situation but a waste of national resources.

Kepco earned 5 trillion won to 12 trillion won ($4 billion-$10 billion) from 2014 to 2016, but suffered 1.35 trillion won in operating losses last year. Its debt swelled from 107 trillion won in 2015 to 128 trillion in 2019.

Its profitability turned negative under the Moon administration. Affected by its nuclear phase-out policy, Kepco reduced the cheapest power generation using atomic energy and instead increased costly methods such as using liquefied natural gas imports.

Kepco estimated its university will cost 1.61 trillion won over 13 years, but the company itself is making a loss.

Nonetheless, the government twisted Kepco’s arm, noting it was Moon’s election pledge to establish a Kepco university. The right thing to do is to shelve or drop the pledge because Kepco’s losses are snowballing. The government should pursue its policies flexibly depending on the situation, but the Moon administration has pushed its policies, particularly election pledges, obstinately. If it wants to establish an engineering specialized university in Jeolla, it would be more economical and rational to take over or invest in a local university.

Kepco is 51 percent owned by the government and 49 percent by the private sector. About 420,000 Korean individual investors hold Kepco stocks. A group of minority shareholder activists filed a lawsuit last year accusing the president and the energy minister of coercing Kepco into following demands or policies that caused losses, and Kepco’s management of malfeasance. It is obvious that Kepco has made a senseless decision.

To establish a university is not an urgent matter for Kepco or the nation. Still, the government approved the plan. It’s likely there was an intent to win support from Jeolla voters.

Many companies and households are staggering due to the new coronavirus. The government announced bold relief measures for them. In this situation, it is carrying out plans that would put a heavy burden on Kepco, which is flailing in the red largely due to the government’s energy policy. To reduce the state utility’s losses, raising electric charges look inevitable and after that, production costs will certainly rise. Probably Moon and the ruling camp may brag about a new engineering university but the burden will be borne by the people.
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