Panel opposes KEPCO split

Ministry calls study invalid, citing conflicts in commission By Kim Ji-hyun

Korea may have to consider scrapping its plan to break up state-run Korea Electric Power Corp.`s distribution business on the heels of a government-commissioned study concluding that the split would not result in lower electricity rates.

Instead, a break-up and subsequent privatization could hurt supply stability, said the year-long study conducted by eight figures from the government, trade unions and academia.

"We recommend the government abandon the split-up and privatization of the distribution businesses of Korea Electric Power Corp. as the process is seen to raise risks in regard to supply and prices," the report said.

However, the Ministry of Commerce, Industry and Energy called the findings invalid and cited conflicts between commission members in drafting the report.

The ministry also claimed to have not been properly notified of the results.

The commission`s study was released Monday, right before the government, labor unions and employers reached a temporary to revive a trilateral panel.

The labor union at Korea Electric has been opposed to privatization since 1999 when the government first announced a plan to sell its stake in the utility and sell the company`s power generation and distribution units by 2009.

"We will have to follow the government`s decision, whatever it may be, but the hard facts show that it`s beneficial for all parties not to privatize Korea Electric," said Lee Kyoung-ho, director of the external cooperation division at Korea Electric.

According to Lee, cases in other countries show that by privatizing electric power facilities, the public was forced to pay higher rates and tolerate inconsistent supplies.

"Also, it doesn`t make sense to break up such a small company. Rather, we should shape up to compete with external rivals," Lee said.