Five Major Power Companies Tightening Belts... The Key is 'Separating Wheat from Chaff' in Investment Projects

Following Korea Electric Power Corporation, five public power generation subsidiaries (Korea South Power, Korea Central Power, Korea East-West Power, Korea South-East Power, and Korea Western Power) are accelerating efforts to improve their financial structure with a scale of 6.2 trillion won for management normalization.

According to the energy industry on the 29th, Korea Western Power has embarked on a financial soundness improvement project worth 2.13 trillion won over five years. This is the largest reduction scale among the five power companies. Western Power believes it can save an additional approximately 100 billion won through the introduction of new technologies, cost reduction, and by recycling by-products. They are directly importing bituminous coal and liquefied natural gas (LNG) to maximize cost savings.

Strengthening the feasibility verification process for new projects has had a positive effect on cost reduction. Through this, they achieved 388 billion won, which is 81.3 billion won (26.5%) more than last year's financial improvement target amount of 306.7 billion won. Adjusting the timing of construction project investment expenditures also had an impact. They are also promoting efficiency in organizational and personnel scale. In January this year, Western Power reduced its workforce by 77 employees and consolidated 19 departments according to the public institution function adjustment and organizational and personnel efficiency plan. They are securing profits by promoting energy efficiency projects targeting national industrial complexes and shared facilities, while simultaneously carrying out projects to eliminate energy welfare blind spots for vulnerable groups.

Seoul Power Headquarters located in Mapo-gu, Seoul, operated by Korea Midland Power Co.

South Power aims to reduce costs by a total of 1.128 trillion won by 2026. To this end, in mid-this month, they will undertake investment cost reductions and project adjustments excluding the stable operation of power supply through an emergency management countermeasure meeting. They decided to reduce debt by about 300 billion won more through additional share sales of other investee companies besides the existing coal mine share sales. They will also continue to promote personnel operation efficiency by consolidating business offices with similar and overlapping tasks.

Central Power has also started a financial soundness improvement project worth a total of 1.23 trillion won by selling non-core assets such as power plant decommissioning facilities to save 280 billion won, and reducing operating expenses (130 billion won) and adjusting investment projects (420 billion won). To improve personnel efficiency, they plan to reduce about 150 employees and have decided to return this year's wage increase for executives at level 2 or higher.

East-West Power plans to reduce a total of 948 billion won through the sale of non-core assets, selection of priority projects, and timing adjustments. In particular, to adjust organizational personnel, they reduced 80 employees by consolidating large departments, dispersing, and eliminating overlapping functions, and are additionally slimming down headquarters personnel. South-East Power has established an additional self-help plan containing financial improvement measures worth 828.2 billion won. They secured 280 billion won by selling unnecessary non-core assets, and reduced about 360 billion won through project adjustments such as strengthening project feasibility verification. According to the public institution function adjustment and organizational and personnel efficiency plan, they reduced the workforce by 123 employees.

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