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Double standards

Oct 15,2018
Public corporations must seek profit as well as public benefits. Without making a profit, they are not companies. But the liberal Moon Jae-in administration simply dismisses their profits by underscoring their public role. Such attitudes may not cause problems for the country immediately, but forces the public to bear their losses with tax money.

Data made public by an opposition lawmaker during the National Assembly’s auditing of the government shows such concerns are not ungrounded. The net profit of 38 major public companies, including the Korea Electric Power Corporation (Kepco), is expected to shrink to 700 billion won ($617.8 million) this year, nearly one tenth of its 6.9 trillion won in profit last year. The drastic fall owes much to underperformances by public energy companies as a result of the government’s relentless push to phase out nuclear power plants. For instance, Kepco’s net profit will likely plunge to 371 billion won this year, a 13.6 percent decrease from last year.

That was a forewarned scenario. Due to the government’s nuclear phase-out policy, the operation rate of nuclear reactors plummeted to 52.9 percent in March from 76.2 percent last May. One of the biggest reasons for the dwindling profit of Kepco was its heavier dependence on expensive fuels such as coal and LNG to produce electricity. The outlook is not bright either. The public utility company estimates its net profit will drop to 690.4 billion won in 2020, a whopping 78 percent decline from 2016.

Lower profits only accumulate debt. Total debts of the 38 public corporations are expected to balloon to 480.8 trillion won this year and 491.8 trillion next year, and to surpass 500 trillion won in 2020. Nevertheless, the Ministry of Finance imparts no sense of crisis. It says our public enterprises’ debt ratio will get better despite their ever-increasing debt. It explains that their net profit will increase steadily after 2019. But someone in the government must explain why Kepco’s stocks plummeted since the launch of the Moon administration in May last year despite its rosy predictions of profit in the future.

The government’s blind push to create jobs in the public sector also puts a burden on public corporations. It still prioritizes increasing workers in the sector over raising efficiency.

When the debt of the Korea Water Resources Corporation soared after it was mobilized to restore the four major rivers under the Lee Myung-bak administration, the Democratic Party vehemently criticized the government for the snowballing debt in the public sector. Such double standards are thrusting the nation into a crisis.

JoongAng Ilbo, Oct. 15, Page 30