2023-11-05 09:52:48
Financial risk 14 public institutions over 5 and a half years
Due to negligence, such as train derailment and employee death,
Penalty levy of 116.7 billion won
Panoramic view of Korea Hydro & Nuclear Power’s headquarters in Gyeongju, Gyeongbuk. [사진 = 한수원]
It was revealed that 14 financial risk institutions, including public energy companies that were subject to intensive management due to high debt, had spent 116.7 billion won in penalty charges over the past five and a half years. If it weren’t for negligence or negligence, more than 100 billion won was wasted, money that should not have been spent. There is criticism that these public enterprises, whose financial condition has already deteriorated, are being operated carelessly.
The total debt of these 14 financial risk institutions has surged by 44% (KRW 138 trillion) from KRW 310 trillion in 2017 to KRW 448 trillion last year. Moreover, it is pointed out that the fiscal soundness plan established by financial risk institutions to reduce debt is a ‘plan for the sake of a plan’ as it contains content that is difficult to realize, such as an ineffective plan or an overly optimistic plan.
According to data received by People Power Party lawmaker Yang Geum-hee on the 5th from the Ministry of Trade, Industry and Energy, the Ministry of Land, Infrastructure and Transport, and the Ministry of Strategy and Finance, the amount spent by 14 financial risk institutions on fines, additional taxes, administrative fines, and employment contributions for the disabled from 2018 to July of this year is It was calculated to be 116.76924 billion won.
The company that paid the largest amount in such penalty charges was Korea Hydro & Nuclear Power, which spent 52.3 billion won. This is followed by Korea Electric Power Corporation (KEPCO) with 21.2 billion won, Korea Gas Corporation with 11.3 billion won, Korea Railroad Corporation with 9 billion won, Korea Land and Housing Corporation with 6.2 billion won, Korea East-West Power Company with 5.8 billion won, Korea Midland Power Company with 4.3 billion won, Korea District Heating Corporation with 2.9 billion won, and Korea Southern Power Company with 2.3 billion won. By type, fines were the largest at KRW 50 billion, followed by additional taxes at KRW 49.1 billion, employment charges for the disabled at KRW 10.1 billion, traffic generation charges at KRW 5 billion, and fines at KRW 1.8 billion.
Looking at the details, the causes of expenditure include accidents and work negligence, such as fines due to train derailments or employee deaths, fines due to delays in reporting foreign exchange transactions, and insufficient number of employees compared to the mandatory number of disabled employees.
These financial risk institutions, whose financial structure has recently deteriorated due to a rapid increase in debt, also establish a plan for financial soundness when establishing a mid- to long-term financial management plan. However, questions are raised about its reliability as it appears to contain ineffective plans.
It turned out that the railroad construction company had made a plan that was virtually impossible to implement. The Korea Railroad Corporation established a mid- to long-term financial management plan for 2022 to 2026 that includes reducing debt through development of the Yongsan Station area. However, in the case of the railway construction, only working-level consultations are underway and the procedures have not even begun. According to the business plan, the licensing, infrastructure construction, and land sales, which would take more than 5 years, are all expected to be implemented within 2 years, and the project is scheduled to be completed in 2023 to 2024. A mid- to long-term financial management plan was established under the assumption that all KRW 6.3146 trillion in sale proceeds would flow in between the two. According to the Yongsan International Business District development plan, land sales are possible after 2025.
There were cases where mid- to long-term financial management plans were set too optimistically and the goals were not achieved. East-West Power established a mid- to long-term financial management plan for 2021 to 2025 and planned to reduce labor costs by 3% and other costs such as insurance premiums by 20% by 2025 compared to 2020. However, without preparing a specific plan or calculation basis for reducing labor costs and other costs, they vaguely and optimistically assumed that labor costs, etc., would decrease. Comparing the forecast of labor costs and other costs in the mid- to long-term financial management plan for 2021 to 2025 with the actual costs incurred in 2021, unlike the mid- to long-term financial management plan, labor costs and other costs actually increased compared to 2020, and KRW 94.1 billion more was spent than planned. .
In addition, the practice of public enterprises increasing construction costs through design changes after construction began continued. According to data received by Rep. Yang from 10 financial risk organizations, these organizations frequently changed the design and increased the construction price after construction began, increasing the construction cost by more than 10 trillion won over the past 11 years. From 2012 to present, there have been 1,448 construction projects in which project costs have increased by more than 500 million won due to design changes, a total increase of 10.8812 trillion won. Although board approval is required to start construction, board approval is not required for design changes, so it is understood that construction costs often increase through design changes. It is pointed out that such design changes and additional expenditures further worsen the financial structure of public enterprises.
Rep. Yang said, “The financial soundness of financial risk institutions, such as public energy companies, is a matter directly related to the safety and livelihood of the people. We need to improve the financial structure, starting with reducing unnecessary expenditures, and thoroughly review the status of financial soundness plans for financial risk institutions.” “It needs to be checked,” he pointed out.
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