President Cho Hwan-eik of the Korea Electric Power Corp.(KEPCO).

A view of the new head office building in Naju, South Jeolla Province, where KEPCO moved in last year.(Photos:KEPCO)

President Cho Hwan-eik of Korea Electric Power Corp. (KEPCO) has proven his managerial skills by being diligent and having an ability to push projects to a successful finish, touring the power company’s jobsites as often as he can to check the company’s operations first-hand.

A former deputy minister at the Ministry of Industry and Resources, which is now the Ministry of Trade, Industry and Energy, he quit the ministry and took over as the CEO of the Korea Investment and Trade Promotion Agency in 2001. He was given credit for reforming KOTRA as an effective private business firm by the business community, which is very rare as he is a former government official who ran a state-owned organization. The business community recognized the fact that Cho worked hard to make changes at KEPCO, a state-run power company, as the CEO as he did at KOTRA.

When Cho took over the top management position at the power company, it was in bad shape, and everyone knew that the company needed reform. The government chose Cho to run the power company, as he did such a good job managing KOTRA.

During his first year at KEPCO in 2013, the National Assembly State Audit discovered that the power company was about to pay 497 retirees some 994 million won worth of Onuri coupons as gifts, although the company ended the year with a loss of 3 trillion won.

Rep. Lee No-geun, a member of the ruling Saenuri Party, revealed that 1,266 employees of the utility company were paid over 100 million won each in annual salaries, the most among state-run companies. The government-run company’s average annual salary per employee was 73.03 million won, one of the highest among government-run companies.

One of the first things Cho did was to expand the company’s cash holdings by selling idle assets. First he sold the company’s 19 million shares of LGU+, a smart-phone telephone operator for 211.2 billion won in cash. He also sold its shares in KEPCO KPS, an affiliate of the power company. But the biggest deal was selling its old company lot in the plush Samsung-dong, Seoul, for over 10 trillion won to Hyundai Motor Group ahead of the state-run power company’s relocation to a different city. The price was way over the market price, but Chairman Chung Mong-koo, said he wanted to buy the land and build a tall building as high as the group’s global reputation as an automotive production group. It will house luxury apartments, shopping malls and offices, among other facilities.

KEPCO’s improved performance has also been the result of low oil prices, and the prices of coal also dipped to help the power company cut its fuel expenses by 3.6 trillion won (14.9 percent) from the preceding year, boosting its operating profit to 5.787 trillion won, up 281 percent from the previous year.

Revenue from the sales of power across the country and profits earned by its affiliates also helped boost the power company’s overall profit.

The company still has a number of large problems to solve, debt being the biggest among them. The debt ratio stands at 198.6 percent.

Power industry sources also note that the company was able to boost its performance thanks to the sale of its old site in Samsung-dong, Seoul to Hyundai Motor Group, rather than reforms made by the new CEO.