The government has unveiled its plan to privatise major state enterprises, including Hanjung (Korea Heavy Industries & Construction Co) and Korea Electric Power. Hanjung will be included in the first wave of conversions.
The plan, which was announced by the Planning and Budget Commission, is aimed at attracting foreign capital, which is desperately needed to pull Korea out of its worst economic crisis in decades.
Hanjung has been the sole supplier of nuclear equipment in Korea; 40.5% of the concern is held by KEPCO with national banks holding the rest.
The government will have to retain more than 51% of KEPCO shares due to the terms of foreign loans taken out in developing its power programme. Power generation will be separated from transmission and distribution for the early privatisation.
The government will sell 5% of its present 58.2% stake in KEPCO by the end of the year. Electricity industry restructuring allowing direct trading of electricity will be drawn up in October to sell power generation facilities.
Hanjung, whose monopoly position was lifted in 1996, has become a hub of Asian power generation facility manufacturing through tie-ins with foreign advanced power generation suppliers.
The government will sell the stocks to both domestic and foreign investors in a public bidding at the earliest possible date. It is to undertake intensive restructuring to maximise the company’s value. Foreign investors which have expressed an intention to buy Hanjung include Alstom, Westinghouse, and ABB.