The new head of Korea Electric Power Corp. (KEPCO), Kim Jong-kap, pledged to improve profitability of the state-run utility firm and forge a new path forward amid the government’s energy policy shift from coal and nuclear power to natural gas and renewables.
“KEPCO’s finances do not look good right now,” Kim said at his inauguration ceremony on Friday. “We need to consider companywide measures to cut costs, boost profitability and improve operations.”
The utility firm posted a 129.4 billion won ($121 million) operating loss in the fourth quarter, its first quarterly loss in nearly five years. Analysts expect the firm to remain in the red in the first quarter.
Market observers attribute the sharp fall in earnings to the government’s new energy policy to phase out coal and nuclear power in favor of renewable energy sources. KEPCO saw its losses widen as it increased the share of costlier natural gas while scaling down fossil fuel and nuclear plants, which are cheaper to operate. Hefty initial investments in wind, solar and other renewable energy projects have also weighed down its bottom line.
Kim called for cooperation among power affiliates and other units within the KEPCO group, saying unnecessary competition undermines efficiency and raises costs.
Kim started his career in the commerce ministry in 1975 and went on to become deputy minister of the commerce ministry and chief of the Korea Intellectual Property Office. He later took the helm of Hynix Semiconductor, now SK Hynix, from 2007 to 2010 and Siemens Ltd. Seoul in 2011.
He was tapped on Tuesday to lead KEPCO, a post that had been left vacant for the past five months. During his three-year term, he would be tasked with aligning KEPCO’s operations with the government’s new energy mix while pitching the country’s nuclear reactors overseas.
By Lee Dong-in and Kim Hyo-jin
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