KEPCO Executives Relay Visits to National Assembly... "Full Effort to Amend KEPCO Act"

[Asia Economy Sejong=Reporter Dongwoo Lee] The management of Korea Electric Power Corporation (KEPCO) has started a relay visit to the National Assembly this week to push for the passage of the KEPCO Act amendment bill that would increase the company's bond issuance limit. The plan is to directly appeal to the legislative body about the liquidity crisis KEPCO is facing and the necessity of the legal amendment, aiming for the bill's passage within this year after it was rejected at the plenary session of the National Assembly on the 8th.

According to political circles and the energy industry on the 13th, KEPCO's standing directors and executives at the senior vice president level and above visited the offices of National Assembly members in the parliamentary office building the previous afternoon to convey the necessity of passing the KEPCO Act amendment bill within this year. It is known that they focused their visits on the offices of members of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee, especially those who indicated opposition to the amendment.

Last week, the amendment bill to raise the KEPCO bond issuance limit from the current "twice the sum of capital and reserves" to up to six times was rejected at the plenary session with 90 votes in favor, 61 against, and 53 abstentions out of 204 members present, failing to secure a majority.

A senior KEPCO official said, "Due to the rejection of the KEPCO Act amendment bill, we felt a responsibility to communicate more actively with the National Assembly and explain the related legislation." He added, "All executives, including 15 standing directors and senior vice presidents, will take turns visiting the National Assembly continuously to seek cooperation for the passage of the amendment." KEPCO is reportedly coordinating schedules with Yoon Kwan-seok, chairman of the Industry, Trade, Energy, and SMEs Committee from the Democratic Party, Kim Han-jung, the Democratic Party's secretary of the committee, and Han Mu-kyung, the People Power Party's secretary.

KEPCO's full mobilization of its management to push for the amendment's passage within this year is because if the bond issuance limit expansion is not approved, it will become difficult to raise operating funds starting early next year. According to the Ministry of Trade, Industry and Energy, the outstanding KEPCO bonds at the end of this year (about 72 trillion won) exceed the current legal issuance limit (about 40 trillion won), making it impossible for KEPCO to issue new bonds from March next year. Since KEPCO has been securing most of its operating funds, averaging 2 trillion won per month, through corporate bonds, this means payments for power purchases and debt repayments will be blocked.

Analysis suggests that for KEPCO to secure operating funds without issuing corporate bonds, electricity rates would need to be raised by at least three times the increase made this year. This year's increase in KEPCO's electricity rates was a total of 19.3 won per kWh (kilowatt-hour). The base fuel cost was raised twice, by 4.9 won per kWh in April and October, totaling 9.8 won, plus a climate environment fee of 2.0 won, a fuel cost adjustment fee of 5.0 won, and an electricity consumption fee of 2.5 won. Based on this, it is judged that electricity rates need to be increased by 57.9 won per kWh next year to achieve financial independence.

However, some analyses say it is premature to conclude that the KEPCO Act amendment bill will pass within this year. The current amendment to increase the corporate bond issuance limit is seen as a temporary fix, akin to "urinating on frozen ground." Democratic Party lawmaker Yang Yi-won-young emphasized again at last week's plenary session that "the reason KEPCO resorted to issuing corporate bonds is because the soaring fuel costs were not reflected in electricity rates, causing deficits to snowball," and that electricity rate hikes are the fundamental solution.

Meanwhile, immediately after the KEPCO Act amendment bill was rejected, 10 lawmakers including Koo Ja-geun of the People Power Party reintroduced the "Partial Amendment to the Korea Electric Power Corporation Act," which is currently under committee review. Lawmaker Koo stated, "KEPCO is facing a serious situation where from next year it may become impossible to secure funds required for the construction and operation of electrical facilities and power transaction payments, making stable power supply impossible."

[Image source=Yonhap News]

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