November 27, 2024

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Korea Electric Power Corp. President and CEO Cheong Seung-il speaks at a company conference announcing a self-relief measures at the Kepco headquarters in Naju, South Jeolla Province on Friday. (Kepco)

Korea Electric Power Corp. President and CEO Cheong Seung-il offered to resign Friday, as the state-operated power utility firm announced a 25 trillion won ($18.7 billion) self-rescue measure to overcome swelling deficit.

Cheong's resignation came after Kepco announced its self-rehabilitation plan, which includes selling off of property assets and wage freeze to improve financial stability. The CEO was appointed to the post in June 2021, and was set to serve for another year in his term.

"I will step down from my CEO post today. For the time being, the company will run under an emergency management system and do its best for a stable power supply, and also prevent worksite accidents," Cheong said in a statement.

The utility firm has been struggling from snowballing losses as global energy prices hiked and they were allowed only limited raise in the electricity rate.

In 2022, Kepco reported a record-high operating loss of 32.6 trillion won, quadruple the figure from a year earlier. Between 2021 and 2022, Kepco posted a cumulative loss of over 38 trillion won.

In the first quarter of this year, the utility firm is expected to log its eighth consecutive quarterly loss, of 5 trillion won.

Kepco announced that the reform plan would save 25.7 trillion won by 2026. It also announced that it will sell its Seoul headquarters building in Yeouido, central Seoul, along with 44 buildings owned by the company and its affiliates under a principle of “selling all available properties.”

Kepco will rent out part of its art center and 10 other buildings across Seoul and other parts of the country, the company said.

To cut costs, the firm will freeze wages of ranking officials and talk with the labor union to ask for all workers to support the measures.

The firm's initial plan to construct a number of electricity facilities will be scaled back. Its organization structure will be also streamlined, Kepco added.

"We will implement stringent measures quickly, and all employees will also be determined to pursue bold innovation for overall reform of the business management system," the firm said.

In addition to the reform plan, the company is expected to raise the electricity rate by about 7 won per kilowatt hour. Currently, the electricity rate stands at 146 won per kWh.

"Feeling a heavy responsibility, we will strictly pursue self-rescue measures to reduce the burden for the people," Cheong said during the announcement on Friday.

"An electricity rate hike is an important step for Kepco to normalize its business operations. ... I sincerely ask for understanding that a rate hike at an appropriate time is inevitable."

Friday’s announcement is part of a revamp for a target goal to save 20 trillion won, as the ruling People Power Party and the government has demanded stronger reform measures.

By Jo He-rim (herim@heraldcorp.com)