South Korea’s state-run utility Korea Electric Power Corp. (KEPCO) said Friday it will sell a major building in Seoul and freeze wages of ranking employees as part of its efforts to improve financial soundness and achieve management innovation over mounting losses.

They are part of a set of self-rescue measures that aim to save more than 25 trillion won (US$18.77 billion) over the next five years, as KEPCO suffered snowballing losses due to high global energy prices and limited hikes in electricity rates amid high inflation and growing economic burdens on the people.

KEPCO earlier came up with plans that call for saving 20 trillion won through the restructuring of overseas businesses and property sales, but the ruling People Power Party and the government have demanded stronger reform measures before seeking electricity rate hikes.

Under the latest plan, the company said it will sell its building in Seoul’s financial district of Yeouido, along with dozens of buildings owned by the company and its affiliates across the country, and rent part of its art center in southern Seoul and several other properties.

It decided to freeze wages of ranking officials to use the money to support energy-vulnerable groups and begin talks with the labor union to have all the workers join the move.

KEPCO will also adjust plans to construct electricity facilities and streamline its organization structure.

In 2022, KEPCO logged a record-high operating loss of 32.63 trillion won, more than quadruple from a year earlier, and it was forecast to suffer over 5 trillion won in loss for the first quarter of this year.

“We will make all-out efforts to swiftly implement the stringent measures, and overcome a financial crisis as early as possible so as to boost managerial efficiency and improve customer services,” KEPCO said in a release.

Also Friday, the Korea Gas Corp. (KOGAS) said it will freeze wages of senior officials and push for a series of cost-cutting measures to improve its financial health ahead of the expected hikes in the second-quarter gas rates.

KOGAS had about 11.6 trillion won in uncollected payments as of end-March.

The government failed to raise electricity and gas bills enough to cover high energy import prices, as a hike in utility fees may impose financial burdens on the public amid high inflation and an economic slowdown.

For the January-March period, the electricity rates were raised by 13.1 won per kilowatt hour and froze gas rates.

The decision on the second-quarter utility bills was yet to be made after a monthlong delay, though officials say the industry ministry is expected to announce the possible adjustment next week.

In a report submitted to the National Assembly, KEPCO called for a 51.6 won rate increase this year.

Global liquefied natural gas prices more than doubled on-year to 1,564.8 won per ton last year, and the price of soft coal spiked to $359 per ton in 2022 from $139.10 a year earlier, according to government data.

Source: Yonhap News Agency