hankyoreh

Transport and Maritime Affairs Committee

By Noh Hyun-woong and Lee Jung-gook, staff reporters

Internal Korail documents confirm that the ultimate aim of establishing the new Suseo KTX subsidiary would lead to railway privatization.

A final report on an organizational plan to prepare for the operation of Suseo KTX, obtained by the Hankyoreh on Jan. 6, showed that privatization was the goal of establishing the subsidiary and introducing a competitive system.

The report outlines the goal of “introducing competition into the public sector by having management authority for the Suseo-Mokpo and Suseo-Busan high-speed rail project (scheduled to open in 2015) administered by a Korail investment company,” after which “competition with the private sector would be introduced by opening money-losing lines abandoned by Korail and new metropolitan rail projects up to public enterprise or the private sector.”

The decision to give up public management of unprofitable lines and turn them over to private companies is considered an extreme form of railway privatization.

Korail and the Ministry of Land, Infrastructure and Transport also voiced their agreement to abandon money-losing lines at a “railroad industry development workshop” back in July 2013.

At the workshop, which was organized for working-level negotiations toward the introduction of a competitive system, Korail said, “New, unprofitable lines keep being built because of political pressures, and the deficits keep getting worse. This is not simply the fault of Korail’s own lax management.”

“We’ve requested reductions for trains with extremely low ridership to improve performance, but they have not been implemented,” Korail added.

The ministry responded that it was “fundamentally in favor” of greater efficiency for unprofitable trains, and promised to “approve requests for a halt to railway service, as opposed to changing the project plan.”

The remarks would seem to support Korean Railway Workers‘ Union claims that the next step in the Suseo KTX plan is to sell off particular lines.

Meanwhile, evidence showed that potential negative effects of Suseo KTX were not taken into account during the Korail board of directors’ vote to establish it.

Korail had previously delivered an internal report to non-executive directors showing net losses of around 100 billion won (US$93.9 million) a year if a separate operating company were set up for the Suseo KTX.

But the findings were not present in the official agenda for the Dec. 20 board of directors’ meeting that voted the plan through. The KRWU claimed that Korail “employed cheap tactics to sidestep breach of trust charges.”

On Dec. 12, the union lodged a complaint against the Korail directors with the Seoul Central District Prosecutors’ Office, claiming they had committed breach of trust by “voting to establish the Suseo KTX management company despite knowing that it could cause financial and asset losses to Korail.”

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