Despite Record Deficit, 150 Billion KRW Support to Korea Electric Power University This Year... Double the Contribution

[Asia Economy Sejong=Reporter Dongwoo Lee] It has been confirmed that Korea Electric Power Corporation (KEPCO) plans to contribute more than 150 billion KRW this year for the operation of Korea Energy Engineering University (KEEU). KEPCO is scheduled to bear an additional burden of over 350 billion KRW from this year until 2025 under the name of university establishment, raising concerns that financial pressure due to management difficulties will intensify.

According to a comprehensive report from our investigation on the 19th, the estimated contribution amount for the establishment and operation of KEEU this year is a total of 158.8 billion KRW. This is more than double the contribution amount last year (71.1 billion KRW) and the highest since support began in 2020. Notably, this is the first year the annual contribution has exceeded 100 billion KRW.

The contribution will be divided with KEPCO alone providing 101.6 billion KRW, and the five major power generation subsidiaries (Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power, Korea East-West Power), Korea Hydro & Nuclear Power, and KEPCO KPS collectively sharing 57.2 billion KRW. While the contributions from the power generation subsidiaries increased by 41.5% (about 17 billion KRW) compared to the previous year (40.4 billion KRW), KEPCO’s share rose more than threefold from 30.7 billion KRW last year.

The significant increase in contribution burden this year is due to the official expansion of infrastructure following the opening of KEEU in March last year. Currently, the only completed building is the administrative and lecture building, which has one basement floor and four above-ground floors. Until the completion of the library, dormitories, and other buildings in 2025, tens of billions of KRW must be spent annually on renting nearby facilities.

If KEPCO’s board of directors confirms the contribution as planned this year, KEPCO will have supported a total of 354 billion KRW for the establishment and operation of KEEU over the past four years (2020?2023). The contribution amounts shared by KEPCO and its subsidiaries have increased annually: 60 billion KRW in 2020, 64.5 billion KRW in 2021, and 71.1 billion KRW last year.

Korea Energy Engineering University was established as a national project under the previous Moon Jae-in administration. It is located in Naju, Jeollanam-do, on a site the size of 48 soccer fields (400,000㎡), with the goal of developing it into one of the world’s top 10 engineering universities, similar to the Massachusetts Institute of Technology (MIT) in the United States. KEPCO committed to investing about 1 trillion KRW over 12 years from 2019 to 2031 for the establishment and operation of the university, which is why it is commonly called 'KEPCO University.'

The total cost for the establishment and operation of KEEU will reach 1.611 trillion KRW by 2031. This includes 1.047 trillion KRW for establishment and 564 billion KRW for operation. Of this, KEPCO is responsible for 621 billion KRW of the establishment cost and about 360 billion KRW of the operation cost, excluding 200 billion KRW borne by local governments. The operation cost will be jointly funded through the Electricity Industry Infrastructure Fund, which accumulates 3.7% of electricity fees.

Fireworks Exploding at Korea University of Energy and Technology (Naju=Yonhap News) Photo by Jo Namsu = On the morning of March 2nd, fireworks exploded at the entrance ceremony and vision proclamation ceremony held at Korea University of Energy and Technology in Naju, Jeollanam-do. Korea University of Energy and Technology, which welcomed its first freshmen on this day, is the world's first energy-specialized research and startup-focused university, operated as a small elite university with 400 undergraduates (100 per grade) and 600 graduate students. [Joint Coverage] 2022.3.2 iso64@yna.co.kr (End)

The problem is that KEPCO recorded a record-breaking operating loss of 30 trillion KRW last year alone, raising concerns that the contribution burden is excessive. The financial industry expects KEPCO to post an operating loss of 5.198 trillion KRW in the first quarter of this year and 10.6655 trillion KRW by the end of the year. Experts point out that excessive contributions are a factor that increases KEPCO’s deficit, and efforts to improve its financial structure may end up being like "pouring water into a bottomless jar."

Securing the contribution amount of 150 billion KRW immediately is also a burden. Facing increased financial pressure, KEPCO requested 10 power generation subsidiaries last year to share the contribution for KEEU. KEPCO, which covers about 1 trillion KRW in monthly operating funds through corporate bond issuance, is ultimately borrowing money to share the contribution for KEEU.

Experts who agree on the importance of nurturing energy specialists also expressed concerns about KEPCO’s excessive contribution burden. Professor Seunghoon Yoo of the Energy Policy Department at Seoul National University of Science and Technology said, "KEPCO is expected to face considerable financial pressure in raising the 150 billion KRW contribution this year," adding, "Considering the 2009 case when Korea Information and Communication University (ICU) merged with KAIST, it is necessary to consider a plan for KEEU to merge with Gwangju Institute of Science and Technology (GIST) and receive funding support from the Ministry of Science and ICT."

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