Increasing the Issuance Limit of KEPCO Bonds... Amendment Bill Submitted to the National Assembly

Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy giving a speech (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] A partial amendment to the Korea Electric Power Corporation Act (KEPCO Act), aimed at raising the issuance limit of KEPCO bonds, has been submitted to the National Assembly.

On the 21st, Lee Chang-yang, Minister of Trade, Industry and Energy, explained the background for pushing the amendment during the plenary session of the Industry, Trade, Energy, Small and Medium Enterprises Committee held at the National Assembly, saying, "KEPCO may violate the KEPCO Act in the March settlement next year. The market will not only lose interest in KEPCO bonds but also have significant concerns about the sustainability and bankruptcy risk of the public corporation."

Currently, KEPCO bonds are allowed up to twice the sum of capital stock and reserves, but it was pointed out that after the March settlement next year, the corporate bond issuance limit will decrease, and issuing bonds thereafter may violate the KEPCO Act.

With global energy prices soaring, KEPCO is expected to record its largest-ever operating loss exceeding 30 trillion won this year. If the large net loss for the current period is reflected in the reserves, KEPCO will no longer be able to issue corporate bonds under the current KEPCO Act.

At the meeting, after the partial amendment to the KEPCO Act was submitted to the National Assembly, it was referred to the Legislation and Judiciary Committee (Bill Subcommittee). There are three proposed amendments to the KEPCO Act, each discussing raising the KEPCO bond issuance limit to 5 times, 8 times, and 10 times the sum of KEPCO’s capital stock and reserves, respectively.

In addition, KEPCO recently conducted a first bidding for operating fund borrowing from commercial banks and reportedly decided to borrow 600 billion won from Hana Bank. The applied interest rate is known to be between 5.5% and 6.0% per annum. KEPCO plans to secure more than 2 trillion won through additional bidding from commercial banks within this year.

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