The South Korean government has decided to reconsider the plan to fund the project of the state-run utility Korea Electric Power Corp. (KEPCO) building an engineering university as a large-scale spending of more than 100 billion won ($75.1 million) every year for the establishment is inappropriate for the debt-ridden company.

“KEPCO is struggling,” Lee Chang-yang, minister of Trade, Industry, and Energy told lawmakers on Thursday. “There is a need to fully reassess the contributions for the planned engineering university. We will consult with the Ministry of Economy and Finance to minimize the budget allocated to the plan.”

The remarks were made in a question raised by Representative Lee Jong-bae of the People Power Party. He asked whether the plan needs to be revised, noting that KEPCO’s losses have reached serious levels.

The plan to build a KEPCO-led engineering university, known as Korea Institute of Energy Technology (KENTECH), was one of the campaign pledges of former President Moon Jae-in.

However, there has been growing skepticism about the plan since last year due to KEPCO’s snowballing losses.

Under the contract signed in 2019, more than half of the budget for establishing and operating KINTECH will be financed by funds from KEPCO.

The other half will be secured by the central and municipal governments, and the university. KEPCO and its subsidiaries have financed 172.4 billion won in the plan until 2022 and will add 158.8 billion won this year, according to the lawmaker.

Industry Minister Lee said that the government will announce a plan to raise electricity rates for the second quarter as soon as next week. The announcement has been delayed for about 40 days as lawmakers have failed to reach a consensus on the increase.

“It has been delayed because of the ongoing review of the potential impacts of a bill hike on the public and industry,” Lee said. “KEPCO will also announce self-rescue plans to enhance its financial soundness.”

The measures will likely include sell-outs of its non-core property assets, like KEPCO Art Center, and plans to reduce labor costs.

In a separate announcement on the same day, Korea Gas Corp. said it posted 11.6 trillion won in the outstanding amount of charges in the first quarter, up 3 trillion won from 8.6 trillion won at the end of 2022. Its sales in the first quarter rose 28 percent on year to 17.9 trillion won. The operating profit fell 36 percent to 588.4 billion won during the same period.

By Song Gwang-sup and Han Yubin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]