South Korea’s power and gas companies, Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. (KOGAS) will make sizeable investments to build up Korea’s energy infrastructure in order to boost the economy of the country which is recovering from the damaging recession of the late 1990s.
KEPCO and KOGAS will expand investments to foster domestic growth. In addition to its six affiliates’ combined budget of 737.5 billion won ($574.51 million), KEPCO has set aside about 4 trillion won ($3.12 billion) to build up Korea’s energy infrastructure this year.
Given the government’s policy of expanding investment, KEPCO has thrown an additional 198.5 billion won ($154.63 million) onto its previous plans. The supplement will fund construction of power transmission sites and substations, the laying of distribution lines and establishment of KEPCO’s branch in South Chungchong Province.
KEPCO plans to spend 55.8 per cent ($1.74 billion) of the existing budget during the first part of this year to help stimulate the sagging domestic economy. It will invest 58.2 per cent ($90.05 million) of the additional funds in the latter part of this year. KEPCO predicts its policies will create 867,000 jobs in 2001.
KOGAS finalized its budget for this year at 1.04 trillion won ($809.77 million), a 76 billion won ($59.2 million) increase from previous plans. KOGAS will use the funds to lay pipes and reclaim tidal flats near Incheon.
Korea Petroleum Development Corp. will spend 84.3 billion won ($64.96 million) on the construction and maintenance of the oil stock centres.
The total sum of state-run firms’ investment in the energy sector this year will exceed more than 6 trillion ($4.67 billion). This is 600 billion won ($466 million) more than originally budgeted.
It is expected that the expansion of investment in energy industry will help boost the construction industry and local economy.
After years as one of Asia’s fastest growing economies, South Korea was hard hit by the Asian crisis of 1997 and 1998. The country has embarked on a programme of economic reform in order to further recover from the downturn and has plans to privatize several large state-owned enterprises, including KEPCO. The break-up of KEPCO into separate businesses handling generation, distribution and transmission is underway.
The privitization process is moving at a slower pace than originally planned due to the question of how much foreign ownership should be allowed as well as strong opposition from labour unions.
South Korea uses a combination of thermal, nuclear and hydroelectric capacity to meet its demand for electric power.