Kepco CEO to step down over ballooning deficit

Cheong Seung-il, Kepco CEO, speaks during an internal convention held at the state utility's headquarters in Naju, South Jeolla, on Friday. Cheong offered to resign that day. [KEPCO]

The head of Korea Electric Power Corporation (Kepco), the debt-ridden state-run utility, will step down from the post amid mounting political pressures over the company's ballooning deficit.

Cheong Seung-il, CEO of Kepco who took on the role in 2021, offered to resign on Friday.

That day, Kepco announced a 25-trillion-won ($18.8-billion) restructuring plan to restore its fiscal soundness.

The measures include cutting the salaries of employees and unloading assets.

Kepco held an internal convention with its executives and employees in attendance and announced the plan to rebuild its financial health.

The utility provider will cut costs by delaying facility construction projects and investments and also reducing operating expenses.

Kepco also said that it will work with the government to reform the current market system to cut spending on purchasing electricity.

Moreover, the money-losing company will sell its office building in Yeouido, western Seoul, one of its most valuable assets based in the greater Seoul area, under the principle of “monetizing every property that can be sold.”

Kepco’s manager-level employees and higher executives will not get raises this year, according to the company. The additional money coming from the given-up raises will be used to support the socially vulnerable.

Kepco's move is driven by big losses.

On Friday, the company posted a net loss of 4.91 trillion won in the first quarter of this year, down 17.1 percent compared to the previous year’s loss of 5.93 trillion won.

The loss was even bigger than the estimated loss of 3.94 trillion won compiled by FnGuide.

Operating loss came in at 6.18 trillion won, compared to 7.79 trillion won during the same period last year. The figure is also bigger than the analyst forecast of 5.3 trillion won.

Sales rose 31.2 percent on year to 21.59 trillion won.

Last year, Kepco posted a record operating deficit of 32.7 trillion won and a net loss of 24.4 trillion won due to soaring fuel prices.

The deficits may rise higher than initially forecast through the year with the Organization of the Petroleum Exporting Countries Plus's decision to cut crude production.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]