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

Korea Electric Power Corp. (KEPCO) President Cho Hwan-eik said KEPCO plans to use much of the company’s largest-ever net profit in 2015 to lower its debt ratio. 

KEPCO President Cho said on Jan. 3, “KEPCO’s rise in net profit is owed to a decline in prices of such raw materials as crude oil; proceeds from the disposing of KEPCO headquarters in Samseong-dong, Seoul; the improving of business performances; and it is reasonable to use the proceeds to pay for its debt.” 

KEPCO chalked up more than 10 trillion won in net profit in the first nine months of 2015, the company’s best ever. Some pundits say that public pressure to lower electricity rates is expected to mount. But KEPCO President Cho made it clear that he plans to use the net profit to improve its financial structure. 

KEPCO saw its operating profit in the first nine months of 2015 surge to 4.227 trillion won, a four-fold jump from 1.158 trillion won in the same period of 2014 and its net profit swell to 9.991 trillion won, a 15-fold jump over last year’s 647.3 billion won. 

KEPCO President Cho said the core of the government’s policy to normalize public entities is about reducing their debts, which may lead to a reduction in people’s financial burden in the mid- to long-run. 

Cho said KEPCO plans to lower its debt ratio to the low 90 percent. KEPCO’s total debt stood at 53.810 trillion won as of the end of the third quarter of 2015. The debt ratio soared to 135.8 percent in 2013 before dropping to 101.4 percent in the third quarter of 2015. KEPCO pledged to the government to lower its debt ratio to 98 percent in 2016. 

KEPCO receives dividends from five power companies making profits due to declining international crude oil prices. Some people say that KEPCO’s receiving of dividends from power companies will only increase pressure on it to lower electricity rates, but the profit it is still insufficient when it comes to making investments into nurturing such new energy industries as energy storage systems (ESS) and electric vehicles, Cho said. 

KEPCO President Cho disclosed his determination to build an ecosystem of “sharing economy” in which the state and local communities work hand in hand. 

Cho issued his 2016 New Year’s message in which he revealed his management phrase “bohapdaehwa” which is a Chinese saying that means “the building of a grand harmony with one mind.” 

Acknowledging that KEPCO, which has made a fresh start at the Bitgaram, will have to overcome challenges and difficulties with cooperation and harmony, Cho stressed the need for building a “sharing economy” between the state and local communities.

“KEPCO, with a 118-year history, needs to be upgraded in keeping with a shift in the paradigm of the global energy industry following the inauguration of the Post 2020 climate change regime in Paris and the relocation of KEPCO headquarters,” he said.  

KEPCO President Cho Reelected for One More Year

KEPCO President Cho was reelected for one more year after reaching the end of his three-year term last December. His new term will last until Dec. 16, 2016. Under law, public entity executives may have their term renewed every year following an initial three-year term.

Cho is not the first KEPCO CEO to be reelected. KEPCO’s eighth president, Park Jung-ki, was reelected once, serving from 1983 to 1987. KEPCO’s 11th president, Lee Jong-hoon, was reelected twice, serving from 1993 to 1998. 

KEPCO President Cho’s reelection was owed to his track record in making excellent business decisions. Cho succeeded in bringing KEPCO back into profit territory one year after he took office in 2013, which industry watchers say is a significant achievement.

KEPCO headquarters building in the innovative city of Naju. Jeollanam-do. (Photos:KEPCO)