S. Korea sets out plan for Kepco privatization

14 Jan 2002 – The South Korean government plans to initiate privatisation of the Korea Electric Power Corporation’s (Kepco) five power generation companies in the first half of the year by selling one of the generating units according to a plan released Tuesday.

As the first step in restructuring South Korea’s power industry and privatizing state-run Kepco, the government split Kepco’s power generation operations into five non-nuclear generation companies and one hydro and nuclear power generation company in April 2001. The government plans to sell the five non-nuclear units to the private sector, while maintaining control of the nuclear generation unit due to security reasons.

The government plans to sell a stake with management rights in the first generation company through an auction as well as a listing of shares on the stock exchange, the Ministry of Commerce, Industry and Energy, or Mocie, said in a statement. The process of the auction and IPO has yet to be finalised by the ministry.

The first company to be sold will be selected after consulting with an advisory institution, the official added.

Privatization of a second power generation company will begin shortly after the first one, and will follow a similar process. The government will then monitor the results of the two companies’ progress and begin the privatization of the three remaining companies in 2005 at the latest, a statement said.

For each of the five power generation companies, Mocie said it plans to transfer management rights to one company or a consortium. No one company or consortium will be permitted to have management rights over more than one generation company.

Foreign investors will be allowed to invest in up to 30 per cent of South Korea’s total power generating capacity, or about two of the five generation units to be privatized, the official said.

To “create effective competition” Mocie said it wouldn’t limit foreign companies’ investment in the first generation company.

Kepco’s five non-nuclear generation companies hold a total of about 60per cent of South Korea’s total power generation capacity, while the hydro and nuclear generation company holds 28 per cent.

Foreign energy companies such as Singapore Power Ltd., US-based Mirant and Belgium’s Tractebel S.A. have said they are interested in acquiring stakes in Kepco’s assets and a ministry official said that four or five Korean firms had shown interest.

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