Public Institution Reform
Government Unveils its Plan to Reform Public Institutions
in Energy, Environment and Education Sectors
The government unveiled on June 14 its plan to reform public institutions in the energy, environment and education sectors. The plan deals with reforming the current functions and capacities in order to ensure that public enterprises focus on their core competencies, provide high-quality services and boost management efficiency.
Five public institutions will be subject to M&As, two will undergo restructuring and twenty-nine will adjust their business models. The government will minimize layoffs by promoting workforces to transfer to the companies where their jobs are moved, and will prepare measures to help change jobs.
Energy Sector
Restructure overlapping functions
- Korea Electrical Engineering and Science Research Institute to be merged with Electric Power Research Institute
- Electric power exporters to focus on their specified areas: Korea Electric Power Corporation (KEPCO) to focus on large scale projects and new energy industries, while the 5 electric power generating public companies to focus on new renewable energy
- Electrical safety inspection, currently carried out by both KEPCO and Korea Electrical Safety Corporation, to be conducted by Korea Electrical Safety Corporation only
- Hydropower facilities to be managed by K-water, instead of Korea Hydro and Nuclear Power Corporation (KHNP)
Focus on core competencies
- Korea Coal Corporation to be downsized
- Overseas energy development projects to be managed more efficiently: Korea National Oil Corporation and Korea Gas Corporation will be restructured with a focus on core assets and increased cooperation with the private sector, while Korea Resources Corporation will downsize its overseas resources development sector.
- KEPCO to stop overseas power generation resources development and gradually sell shares it holds in 9 mine fields
- Korea Electrical Safety Corporation to stop serving non-core functions, such as electrical product approval and electric pole management
- Korea National Oil Corporation to transfer some of its functions to Korea Energy Agency, such as the management and appropriation of the Energy Special Account
Open markets to the private sector
- Private companies to be able to engage in electric power retailing, currently carried out by KEPCO
- Gas imports and the wholesale market to be gradually open to the private sector starting in 2025
- Private companies to be able to engage in the maintenance of electric power generation equipment, currently carried out exclusively by KEPCO Plant Service and Engineering
- More private companies to be able to participate in nuclear power plant design, one of the functions carried out by KEPCO Engineering and Construction
- KEPCO to close its fiber optic cable installation business in 2017 in order to avoid possible overlaps with the private sector
Promote sound management
- A total of 20-30 percent of shares in eight energy public enterprises to be listed starting in the first half of 2017, which will put those companies under market watch and eventually improve their financial soundness
- Korea District Heating Corporation to increase capital by issuing new stocks in order to improve its financial conditions
- Korea Resources Corporation and Korea District Heating Corporation to sell shares they hold in 10 companies whose businesses are irrelevant to their core functions
Strengthen the new energy sector
- KHNP to focus more on exporting nuclear energy and the International Nuclear Graduate School, currently operated by KEPCO, to go under KHNP
- Energy public enterprises to increase investment in new energy industries
Environment Sector
Restructure overlapping functions
- The National Institute of Ecology and three other ecology public institutions to be merged into one
- Overlapping services between Korea Environment Corporation and Korea Environmental Industry and Technology Institute to be fixed: Korea Environment Corporation to focus on environmental protection and Korea Environmental Industry and Technology to focus on product safety
Open market to the private sector
- Korea Environment Corporation to close businesses where it unnecessary competes with the private sector, such as recycling facilities management, from 2017
- Contracts made between local governments and Korea Environment Corporation for the operation of environmental facilities not to be extended
Education Sector
Restructure overlapping functions
- Korea Institute of Science and Technology Information to be made in charge of purchasing information from overseas, which has been jointly done with Korea Education and Research Information Service
Avoid unnecessary competition with the private sector
- Korea Foundation for the Promotion of Private Schools to close their teacher training programs if they overlap with programs provided by the private sector
Plans for the Future
Ministries will have prepared schedules specific to industries and corporations by July, and the Ministry of Strategy and Finance will examine the implementation of the plan by regularly holding meetings.
Please refer to the attached pdf
