109 entities to be cut, Korea Land and Housing to be split into two
The Korean government unveiled a sweeping public-sector overhaul Thursday that aims to merge major state-run power, port and energy companies while splitting housing giant Korea Land and Housing Corp., or LH, into two.
The Public Institution Functional Reform Plan seeks to reduce the number of public entities by 109 through strategic restructuring, consolidation of overlapping functions and absorption of subsidiaries and small agencies.
The five state-run power generators — Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power and Korea East-West Power — will be combined into a single company tentatively named Korea Power Generation.
The government said the companies' separate operations had led to overlapping investments and limited economies of scale. The new company will have dedicated divisions for major renewable energy projects and a transition away from coal, along with three or four regional units overseeing local solar and onshore wind projects.
The Busan, Incheon, Ulsan and Yeosu Gwangyang port authorities will also be merged into a tentatively named Korea Port Authority. The four existing operators will become regional branches responsible for locally specialized projects.
Korea National Oil Corp. and Korea Gas Corp. will form a new Korea Energy Resources Corp. The government expects the merger to improve Korea’s response to supply chain disruptions and strengthen its bargaining power with oil-producing countries and global energy companies.
Korea Coal Corp. will be liquidated after the closure of all its mines.
The government will not immediately merge Incheon International Airport Corp. and Korea Airports Corp. It will first pursue measures to promote cooperation between Incheon and regional airports before reconsidering consolidation.
It also plans to unify the high-speed rail operations of Korea Railroad Corp., or Korail, and SR Corp. to increase seat availability and improve fares, mileage programs and passenger convenience.
LH, meanwhile, will be split into two entities. Its land development and home construction operations will become a tentatively named Korea Housing and Urban Development Corp., while housing welfare and property reserve functions will be assigned to Korea Housing and Urban Asset Corp.
Part of the development company’s profits will be channeled through the Housing and Urban Fund to finance the welfare-focused entity. The Land Ministry will announce further details separately.
Eleven entities will be removed by merging organizations with overlapping roles, while another 83 will be cut through the consolidation of subsidiaries and small agencies.
The government said it would seek swift legislative support and immediately proceed with mergers that do not require legal revisions. It pledged to guarantee employment transfers and prevent any deterioration in pay or working conditions.
ch0221@heraldcorp.com
