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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] Korea Electric Power Corporation (KEPCO)’s efforts to improve its financial structure through asset divestments have effectively come to a halt, following a government move to restrict the sale of strategic assets held by state-owned enterprises. The policy, aimed at preventing privatization and potential overseas transfer of key national assets, has also stalled transactions between KEPCO and its own subsidiaries.
According to investment banking industry sources on May 7, KEPCO had been in negotiations with its subsidiary KEPCO KPS over the sale of its stake in the Al Qatrana gas-fired combined cycle power plant in Jordan. However, discussions have since stalled with no further progress. The sale process has been advised by EY Hanyoung. While Korea Hydro & Nuclear Power and others reviewed the acquisition, KEPCO KPS ultimately remained the sole participant and de facto preferred bidder.
The Al Qatrana plant is a 373MW gas-fired combined cycle facility with a total project cost of USD 461 million (approximately KRW 640 billion). KEPCO holds an 80% stake in the operating company, Al Qatrana OpCo, through its intermediate holding entity, Al Qatrana HoldCo, while the remaining 20% is owned by Saudi Arabia-based Xenel Industries.
The suspension of the transaction stems from a government directive issued late last year that effectively prohibits equity sales by public enterprises. The measure was introduced to strengthen oversight by the National Assembly and prevent rushed or opaque disposals of public assets. Under the new framework, any asset sale exceeding KRW 30 billion must undergo Cabinet review and be reported in advance to the relevant parliamentary committee. Concerns over strategic assets being sold to foreign entities also underpin the policy.
The halt in asset sales is widely seen as a major setback for KEPCO, which has been seeking to reduce losses and deleverage its balance sheet. The company reported consolidated revenue of KRW 97.43 trillion and operating profit of KRW 13.52 trillion last year, supported by higher electricity tariffs, particularly for industrial users. However, KEPCO accumulated more than KRW 40 trillion in losses over the three-year period from 2021 to 2023, and its total debt stood at KRW 205.7 trillion as of end-2024. The utility currently faces daily interest expenses of approximately KRW 11.9 billion, translating to around KRW 4.3 trillion annually.
In response to its elevated debt levels, KEPCO had been pursuing asset disposals, including overseas holdings such as the Jordan plant and coal-fired power assets in the Philippines. With the latest policy restrictions, however, virtually all divestment processes have been suspended.
Market participants note that amid growing calls from industry for electricity tariff cuts, asset sales remain one of the few viable options for KEPCO to improve its financial position.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
