The state-run Korea Electric Power Corp. is facing fresh criticism as reports found on Monday that the utility and its subsidiaries doled out hefty salary increases for employees last year despite their multi-trillion won debt.
According to a report submitted by the Ministry of Knowledge Economy for the National Assembly, KEPCO has 33.4 trillion won ($29.5 billion) in debt as of last year, up more than 60 percent from 20.6 trillion won in 2006. That translates to a debt-to-equity ratio of 81.3 percent, versus 47.9 percent five years ago.
KEPCO’s five electricity subsidiaries have also seen their debt grow sharply over the last five years, largely driven by a surge in production costs, the report showed.
But a separate report by the Ministry of Strategy Finance said KEPCO employees won a 10.7 percent salary increase on average last year plus other benefits amounting to 172.4 billion won in total. Their annual income is averaged at about 71.5 million won.
Nearly 760 workers at KEPCO earn more than 100 million won a year, other data showed, the highest among 60 public institutions registered under the Economy Ministry.
Wage hikes at its affiliates range from 4.7 percent to 10.2 percent. The Korea Hydro & Nuclear Power Co. logged the highest average annual pay of 79.4 million won and the Korea East-West Power Co. the lowest of 76 million won.
Such disclosure stoked criticism among policymakers and the public that the energy firms were calling for electricity rate lifts and more funds while fattening their own pockets.
Debt has been a headache for many state-funded companies as it erodes their financial soundness and heaps pressure on the government budget.
“If state-run firms default on their debt, the government would have to plug the hole, which would in turn become the taxpayers’ burden,” Kim Sung-hee, a lawmaker of the ruling Grand National Party, said during an audit.
KEPCO particularly has been on the horns of a dilemma between shrinking revenue and its responsibility as a public enterprise in charge of electricity supplies.
KEPCO, which is listed on Seoul’s KOSPI and the New York Stock Exchange, has been calling for a hike in electricity charges as it struggles to turn into the black since 2008 with an accumulated net loss of 6.1 trillion won.
In August, the government raised rates by 6 percent for industrial use and 2 percent for homes but that KEPCO claims still falls far short of what is needed to clear deficits given spiraling raw material prices.
Last Thursday’s massive nationwide brownouts added fuel to the fire as the unprecedented incident left thousands of residents in the dark and crippled business operations across the country.
President Lee Myung-bak was furious with electricity suppliers, saying they lacked a sense of duty during a visit to KEPCO on Friday. He also criticized employees of state-run companies, which are highly popular among job seekers for their high pay and job-security.
“(The incident occurred because) you don’t have the mindset of serving the people at all,” Lee told officials from KEPCO, the economy ministry and power plant firms.
By Shin Hyon-hee (
heeshin@heraldcorp.com)
