[THE INVESTOR] State-run electricity provider Korea Electric Power Corp..’s gasification joint venture has built up over 5.4 billion won (US$4.81 million) in operating loss since 2011, a National Assembly Budget Office report shows.

According to the report, KEPCO-UHDE, a joint venture established with Germany’s ThyssenKrupp Industrial Solutions, has posted annual operating losses ranging between 492 million won and 1.77 billion won. During the period, the company’s net deficit ranged from 277 million won to 1.35 billion won.

At the time of establishment, KEPCO claimed it would reclaim the 1.14 billion won investment within seven years. The South Korean power provider projected KEPCO-UHDE’s profit rate at 11.1 percent.

“The operating losses are affected by the drop in fossil fuel prices, but KEPCO also overestimated demand and profitability when deciding to make the investment,” the report said.

The report also said that KEPCO increased KEPCO-UHDE’s financial risks by pushing ahead with capital increases and loans for the company without holding board meetings.

By Choi He-suk (cheesuk@heraldcorp.com)