National Assembly approves bill to raise ceiling on debt-ridden KEPCO’s bond issuance

The National Assembly on Wednesday approved a legal revision meant to raise the ceiling on bond issuance by money-losing state-run Korea Electric Power Corp. (KEPCO) in order to prevent a liquidity crisis at the firm and ensure stable power supply.

The partial revision allows KEPCO to raise its bond issuance ceiling by two to five times the sum of its equity capital and reserves.

In times of particular financial difficulties, KEPCO can issue bonds up to six times the current ceiling. In such case, the firm must seek approval from the industry minister, who then is obliged to immediately report the issuance to the related committee of the National Assembly.

The bill garnered 166 votes at the plenary session of the National Assembly, along with nine opposition and 24 blank votes.

The revised law is effective until Dec. 31, 2027.

The bill was first rejected on Dec. 8 mainly due to opposition from lawmakers of the main opposition Democratic Party who argued that raising the ceiling is not a fundamental solution to the company’s liquidity crisis.

But the bill passed in a renewed attempt on Wednesday amid concerns that electricity charges could increase at least three fold next year without a revision and consensus that there is no easy solution to KEPCO’s longstanding liquidity problem.

KEPCO has been struggling with huge losses on high fuel costs and limited electricity rate hikes.

According to the revised law, the industry ministry and KEPCO also must keep down the amount of bond issuance and try to improve its financial conditions, in relation to the new bill’s impact on the country’s economy and financial market.

Along similar lines, the revised act also allows another state-run energy firm Korea Gas Crop. (KOGAS) to raise the ceiling of its bond issuance up to five fold.