President Kim Jong-gap of Korea Electric Power Corp. (KEPCO).

Under the stewardship of President Kim Jong-gap, Korea Electric Power Corp. (KEPCO), attention is focused on whether the power utility, which is in an emergency management mode, could be rescued. Kim took office six months ago.

President Kim was appointed as a “relief pitcher” to turn around KEPCO, which logged massive operating losses in the first half of this year.

President Kim is turning to short-term measures such as a rise in the operation of nuclear power units while attempting to ponder long-term tasks such as the restructuring of the rigid electricity fare system.

KEPCO posted 1,395,2 billion won in operating profit in the third quarter thanks to a rise in the operation of nuclear power units, a departure from operating losses in the first six months of the year. KEPCO reported poor earnings starting in the fourth quarter of 2017 as its subsidiaries saw a rise in fuel costs, and the profitability of nuclear power units declined.

Furthermore, implications, coupled with a rise in depreciation, caused by expanding facility investments, led to the logging of 687.1 billion won in operating losses in 2018 Q2 for the third straight quarter. KEPCO chalked up 129.4 billion in operating loss for the fourth quarter of 2017 and 127.6 billion in operating loss in the 2018 Q1.

Upon being inaugurated in April as a “relief pitcher” President Kim declared an “emergency management mode” to take self-rescue measures. He started with steps to overhaul operations, including retrenchment.

A rise in the operation of nuclear power units during summer with high electricity demand, coupled with retrenchment efforts, contributes to a shift into the operating profit. Earlier, The market consensus showed that KEPCO was forecast to log between 700 billion won and 800 billion won in operating profit in 2018 Q3.

The government gave a temporary relief in summer electricity charges to households in the progressive charging system, incurring 300 billion won in additional costs to the electric utility.

Despite of the difficult business situation, as KEPCO hit an operating profit in 2018 Q3, President Kim’s efforts will be evaluated highly, business sources said. Consolidated fiscal statements for 2018 Q2 reflected 560 billion in depreciation for Wolsong Nuclear Power Unit 1 of KHNP, a factor to expand KEPCO’s losses in the quarter.

Even if KEPCO hit an operating profit in 2018 Q3, chances are high President Kim’s retrenchment will be continued until the end of this year. The reason is that international crude oil price fluctuations, which have great impact on KEPCO’s performances, are uncertain.

KEPCO Headquarters in Naju. (Photos: KEPCO)