Why Public Institutions Are Merging Again

The government has said it will adjust the total number of public institutions, currently 564, to roughly 415.

This goes beyond simply reducing the number of agencies; its core aim is to redesign the functions and roles of public institutions to fit a changing policy environment.

In 2001, Korea Electric Power Corporation (KEPCO) held a monopoly over generation, transmission, and distribution, making it a state-owned giant with assets exceeding 100 trillion won.

The government pursued the separation of KEPCO's generation division on the judgment that introducing competition would raise efficiency and service levels. The move also served as a preparatory step toward privatization right after the Asian financial crisis.

As the number of public institutions grows, each agency duplicates departments such as planning, personnel, and accounting, and larger organizations and staff push up costs. In fact, public institution debt has steadily risen and surpassed 769 trillion won last year.

The government also aims to raise the efficiency of large-scale renewable energy project investments by integrating fragmented organizations, and it has looked to Japan's merger of its oil and gas state enterprises as a reference.

The merger of Korail and SRT combined their booking apps into one, improving user convenience and service. According to Korail, daily weekend seat supply rose by up to 17,000 seats after the September merger, and fares fell by an average of 10%. Booking can now also be done in a single app, improving convenience for users.

In response, the government announced principles that guarantee employment succession during the consolidation process and that workforce reassignment will take place through natural attrition.