Performance of 5 Power Companies Divided by Joy and Sorrow in 'Seoktan Power Generation'

Korea Midland Power’s Operating Profit Down 58.9% in H1 after Closing Boryeong Units 1 and 2
Namdong Power’s Operating Profit Also Falls 21.9% Following Suspension of Samcheonpo Units 1 and 2

Dongseo and Seobu Power Turn Profitable… Impact of Increased Coal Power Generation and Rising Oil Prices

(Photo) [Image source=Yonhap News]

[Asia Economy Reporter Joo Sang-don] The coal power generation performance caused mixed results among five public power companies. Korea Namdong Power and Korea Midland Power saw a decline in operating profit due to reduced electricity sales following the closure of some coal power plants, while Dongseo and Seobu Power turned profitable thanks to increased coal power generation.

According to the half-year reports of the five power companies on the 20th, Korea Midland Power and Korea Namdong Power’s operating profits (consolidated basis) in the first half of this year decreased by 58.9% and 21.9%, respectively, compared to the same period last year.

For both Korea Midland Power and Korea Namdong Power, the closure of coal-fired power plants was the main cause of the decline in operating profit. Korea Midland Power’s sales in the first half of this year were 2.1402 trillion KRW, down 140.9 billion KRW (6.2%) from 2.2811 trillion KRW in the same period last year, and operating profit decreased by 67.8 billion KRW (58.9%) from 115.2 billion KRW to 47.4 billion KRW during the same period. A Korea Midland Power official explained, “The closure of coal power plants Boryeong Units 1 and 2 on December 31 last year led to a decrease in sales and operating profit. During this period, electricity sales volume dropped by 8%, reducing electricity sales revenue by nearly 160 billion KRW.” If Boryeong Units 1 and 2 cease operations in May next year, Korea Midland Power’s performance is expected to fluctuate again.

Korea Namdong Power showed a similar trend. Sales increased slightly by 0.1%, from 2.2458 trillion KRW in the first half of last year to 2.2444 trillion KRW in the same period this year. Operating profit fell by 21.9%, from 117.2 billion KRW to 91.5 billion KRW. This is attributed to the suspension of Samcheonpo Units 1 and 2 in March this year.

Dongseo Power and Seobu Power, which did not close any coal power plants, succeeded in turning profitable thanks to rising international oil prices. According to the Korea National Oil Corporation, Dubai crude oil prices rose from $49.84 per barrel at the end of December last year to $71.60 per barrel in June this year.

Dongseo Power’s sales increased by 9.6%, from 1.9631 trillion KRW in the first half of last year to 2.1509 trillion KRW this year, and operating profit turned from a loss of 46.6 billion KRW to a profit of 112.3 billion KRW. A company official said, “Due to the rise in international oil prices, the electricity prices sold to Korea Electric Power Corporation increased compared to last year. The coal power generation adjustment factor for the first half was maintained high at 1.0, which increased sales, and the provision for renewable energy certificates (REC) and greenhouse gas provisions decreased by about 117.8 billion KRW compared to the previous year, helping improve performance.” Seobu Power also saw an 18.6% increase in sales and turned profitable in operating profit in the first half of this year.

However, the future performance of power companies is not optimistic as pressure to suspend coal power generation continues to grow. Dongseo Power plans to halt operations of the coal power plants Honam Units 1 and 2 on January 1 next year. The company’s performance will decline by the amount of revenue generated from Honam Units 1 and 2.

Korea Southern Power also recorded an operating loss of 12.7 billion KRW in the first half of this year, turning to a deficit. This is because its coal power generation ratio is lower than other power companies, and it has a higher proportion of liquefied natural gas (LNG) combined cycle power generation. Since the sales price to KEPCO is determined based on the most expensive fuel price, it cannot generate much profit.

An industry insider said, “Power companies with a high proportion of coal power generation improved their performance in the first half of this year, but due to rising fuel costs, their performance is likely to decline in the future. Additionally, power companies facing upcoming coal power plant closures may experience even greater profit decreases.”

This content was produced with the assistance of AI translation services.