The South Korean government is carrying out a massive consolidation of public institutions responsible for the nation's core infrastructure.

Plans are being pushed forward to merge five state-run power generation companies into a single entity and integrate four regional port authorities into one unified corporation.

Korea National Oil Corporation (KNOC) and Korea Gas Corporation (KOGAS) will also be combined into a single organization.

Korea Land and Housing Corporation (LH), whose functions have traditionally been handled by a single entity, will be split into two separate organizations to accelerate housing supply.

The government announced the "Public Institution Functional Reform Promotion Plan" containing these measures today (Sept. 3).

The overall objective is to downsize or reduce a total of 109 public institutions.

The core objective of this restructuring is to strategically redeploy public institution technologies and human resources, streamline similar and overlapping functions, and integrate subsidiaries and small-scale agencies.

Fifteen institutions will be reduced through strategic structural reforms.

In the power generation sector, five generation companies—Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power, and Korea East-West Power—will be integrated into a single legal entity.

The government proposed the tentative name "Korea Power" for the integrated entity.

The government's perspective is that operating as separate legal entities has previously led to similar and overlapping investments and a lack of economies of scale.

The integrated corporation will establish a Renewable Energy Headquarters in charge of large-scale projects such as offshore wind power, and a Just Transition Headquarters responsible for the phase-out of coal-fired power. In addition, 3 to 4 regional headquarters will be set up to handle local renewable energies such as solar and onshore wind power.

Four port authorities, which share identical functions but are scattered across different regions, will also be integrated into one.

Busan Port Authority, Incheon Port Authority, Ulsan Port Authority, and Yeosu Gwangyang Port Authority will be merged into a tentatively named "Korea Port Corporation," adopting a structure with four regional branch offices to pursue region-specific specialized businesses.

Korea National Oil Corporation and Korea Gas Corporation will be merged into a tentatively named Energy Resources Corporation.

The government explained that there is a necessity to establish a national-level integrated energy strategy for oil and gas and to respond to supply chain crises, including geopolitical risks.

Through economies of scale upon integration, international bargaining power against oil-producing countries and global energy companies can be enhanced.

The oil stockpiling and limited oil exploration and development functions of the oil corporation will be transferred to the integrated corporation, while distribution structure improvement functions such as discount gas stations (Alddul gas stations) are planned to be transferred to the Korea Petroleum Quality & Distribution Authority.

The Korea Coal Corporation, whose functions have ended with the closure of all mining stations, is planned to be liquidated.

In the aviation sector, the two major airport corporations will not be integrated immediately; instead, a plan to vitalize local airports will be formulated first to achieve balanced growth between Incheon Airport and local airports.

Afterwards, the implementation progress will be reviewed to reexamine whether to integrate them.

Korea Railroad Corporation (KORAIL) and SR, which began integrated operations, plan to enhance public convenience by unifying the high-speed rail operation system to expand seat supply and improve fares and mileage.

The core of this public institution functional reform in the real estate and housing sector is Korea Land and Housing Corporation (LH).

The government decided to completely separate the development function and the housing welfare function currently mixed within a single organization at LH.

The plan is to spin off LH's land development and housing construction functions into a tentatively named "Housing & Urban Development Corporation," and its housing welfare and asset reserve functions into a tentatively named "Housing & Urban Asset Corporation."

The government explained that inefficiencies occurred—such as a slowed housing supply and increased burdens in operating rental housing—while performing functions emphasizing the speed and financial performance of development projects alongside the public nature of housing welfare within a single organization.

In particular, rather than simply separating the two institutions, a linkage will be established so that development profits lead to housing welfare financial resources.

This structure involves setting aside a portion of the development corporation's profits in a separate account within the Housing and Urban Fund, which then contributes to the asset corporation.

However, detailed organizational functional restructuring plans will be announced by the Ministry of Land, Infrastructure and Transport through a separate "LH Reform Plan."

Eleven institutions will be reduced by integrating similar and overlapping functions.

Korea Broadcast Advertising Corporation and the Korea Press Foundation (Viewer Media Foundation) will be merged into a tentatively named Korea Broadcast, Media and Communications Promotion Institute to respond to changes in the media environment.

The Labor Standards Foundation (Korea Labor Foundation) and the Korea Employment and Labor Education Institute will also be integrated into a tentatively named Labor-Management Development & Education Foundation.

The Daegu Gyeongbuk Medical Innovation Foundation and the Osong Medical Innovation Foundation will be combined into a tentatively named Advanced Medical Industry Promotion Foundation.

Korea SMEs and Startups Distribution Center and Public Home Shopping will launch as a tentatively named SME Marketing Promotion Corporation, establishing a unified distribution platform spanning SME product discovery, consulting, store entry, sales, and performance management.

Eighty-three institutions will be cut through the integration of subsidiaries and small-scale agencies.

This involves cases where a parent company absorbs and integrates its subsidiary if the subsidiary performs similar or related tasks to the parent company, or integrates subsidiaries with fewer than 100 employees performing similar tasks, or integrates subsidiaries performing similar tasks even if their supervising ministries differ.

For example, the parent company Korea Job World and its subsidiary Korea Job World Partners will be vertically integrated.

Seven financial public institution subsidiaries will be horizontally integrated.

Facility management subsidiaries Kamco FMC, Yaeul FMC, KDB Biz, Eximbank Plus, and Shinbo Operation Management will launch as tentatively named Policy Finance FMC, while customer management units Kamco CS and HF Partners will be integrated into tentatively named Policy Finance CS.

(Photo: Yonhap News)