Fitch affirms KEPCO's rating, outlook stable

By Kim Young-gyo
HONG KONG, May 24 (Yonhap) -- Fitch Ratings said Tuesday it has affirmed the A-plus credit rating of Korea Electric Power Corp. (KEPCO), citing the company's strong position in the South Korean market.
The global ratings appraiser added its outlook for South Korea's state-run power company remains stable.
Fitch said the affirmation of the fifth-highest rating on its 20-tier rating scale reflects the company's status as a key state-owned enterprise and its monopolistic position in the electricity transmission and distribution business in South Korea.
"The government maintains full control over the management and operations of KEPCO," Fitch said in a statement. "KEPCO's six wholly-owned generation companies each generates more than 10 percent of the country's total electricity production, and their investment is in line with the country's long-term electricity supply and demand plan."
The credit rating agency also affirmed the ratings of KEPCO's six subsidiaries at A plus, saying their operational ties with KEPCO and the government are strong.
The South Korean Ministry of Knowledge and Economics has recently approved the revision of tariff clauses in the KEPCO Act, which will allow the beneficial fuel cost adjusted-tariff system possibly from July 2011.
Fitch expected the state-run company will largely benefit from the revised act.
"Although KEPCO's consolidated free cash flow will remain negative due to significant investments in nuclear power plants and renewable generation assets, the implementation of the fuel cost adjusted-tariff system should strengthen the company's financial position in the medium-term," it said.
KEPCO said last week it has won a US$46 million order from the Dominican government to build power-transmission lines in the Caribbean island nation. The company said it will complete the 400-kilometer power-transmission line by May 2013.
ygkim@yna.co.kr