The government’s announcement of a tentative plan to introduce competition to train operations is rekindling a dispute over the privatization of operations of the high-speed KTX.
Last week, the Transport Ministry announced proposals made by its civilian reviewing committee to end the monopoly of the state-run rail operator KORAIL for the industry development.
The centerpiece of the proposals was about who should operate the new high-speed KTX routes connecting Suseo in southern Seoul to the southern part of the country, which will open in 2015.
The former government had pushed for the privatization of the second KTX operation, but made little progress in the face of resistance from opposition parties and KORAIL’s labor unions.
Under the committee’s proposals, KORAIL would have five companies and would be transformed into their holding company.
According to the proposal, one of KORAIL’s five companies would operate the second bullet-train line, which is to depart from Suseo. But KORAIL’s stake would be limited to 30 percent. Investments from the private sector in the new KTX operator would not be allowed. Instead, the government would encourage public funds to be stake holders.
Ministry officials said the business structure on rail operations takes its form from the German model, in which several quasi-public corporations compete with one another.
“The system will improve the business efficiency, without causing too much confusion to the market, as the competition is limited to public or quasi-public organizations only,” a ministry official said.
But opponents said the committee’s plan is nothing but a tactic to circumvent the issue of the objection to the privatization of the new KTX operation, raising a possibility that the government may eventually pave the way for KORAIL to sell its stakes to private companies.
Opposition parties and KORAIL’s labor union have opposed the privatization of KTX operations, claiming that it would result in fare hikes and safety problems.
Some KORAIL officials expressed opposition to the committee’s plan, saying the “compromising” idea is too abstract because it lacks how to improve railway service and reduce costs.
“The ministry seems to intend to dodge the public’s general sentiment against the privatization of the second KTX operation,” said an official at the Korean Railway Workers’ Union.
“This is just an expedient as KORAIL is entitled to sell off its stake to the private purchaser any time,” he said.
Apparently mindful of such concerns, ministry officials said the government would seek to include regulations in a way to ban KORAIL from selling off its stocks.
But the ministry may revise the committee’s proposal before the final plan is announced next month as some doubted the objectiveness of the panel’s proposals.
Some of the 20-member committee recently resigned, claiming that they were forced to agree with what they called a “semi-privatization” plan.
By Bae Hyun-jung (
tellme@heraldcorp.com)
