Seoul Metro's Total Funding Shortfall of 974.1 Billion Won ...Urgent Measures Needed for Cash Flow Management

Seoul Metro to Issue 365.7 Billion Won in Bonds, Still Faces 608.4 Billion Won Funding Shortfall; Councilman Jeong Jin-cheol Urges Strong Self-Help Measures Including Cost Reduction, Unnecessary Overseas Project Cleanup, and Idle Real Estate Sales to Break External Borrowing Cycle

[Asia Economy Reporter Park Jong-il] The operating deficit of Seoul Metro, which operates the Seoul urban railway, has deepened, revealing a funding shortfall of 974.1 billion KRW this year.

Seoul Metro plans to issue 365.7 billion KRW in corporate bonds to compensate for transportation revenue losses caused by the novel coronavirus infection (COVID-19), but even after issuance, there remains a shortfall of 608.4 billion KRW, highlighting the urgent need for extraordinary liquidity management measures.

Before the main business report on Seoul Metro at the 295th regular session of the Seoul Metropolitan Council's Transportation Committee, Seoul Metro reported a proposal for the occasional issuance of 365.7 billion KRW in corporate bonds to cover revenue deficits caused by COVID-19.

However, even if this bond issuance proceeds smoothly, the remaining operational funding shortfall reaches 608.4 billion KRW, pointing to a chronic liquidity crisis that would require large-scale external borrowing again without special countermeasures.

Jin-cheol Jeong, a member of the Seoul Metropolitan Council (Democratic Party, Songpa 6), stated, "Seoul Metro is barely covering accumulated operating losses by simply deferring expenses to the next year or relying on short-term external borrowing such as loans from Seoul City or financial institutions (CP)." He urged, "Instead of covering the insufficient operating funds solely through short-term borrowing, Seoul Metro must prepare and implement strong self-help measures such as cost reduction, liquidation of unnecessary overseas projects, and sale of idle real estate."

In response, Sang-beom Kim, President of Seoul Metro, pledged to thoroughly review the raised issues and promptly prepare and implement improvement plans.

Since its integrated launch in May 2017, Seoul Metro has continuously recorded operating losses, with a net loss of 586.5 billion KRW in 2019. This year, the operating fund shortage has worsened due to a sharp decline in transportation revenue caused by COVID-19, decreased ancillary income from increased commercial vacancies, and repayment of matured financial debts.

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