KOMIPO CEO Chung Chang-kil expects to earn $25.4m in power plant profits post-2014 crisis

Asian Power Awards 2017's CEO of the Year shares how he brought the company to new heights.

Two years after a crisis brought by the government’s continuous undervaluation of KOMIPO, its CEO believes the firm is now on the right path to fully reversing the crisis with hefty plant profits.

When KOMIPO CEO Chung Chang-kil found that employee morale in the field had fallen far more than he expected due to the relocation of KOMIPO head office and the constant undervaluation of the company by the government, he knew that he had to make conscious efforts to increase kinship with field employees.

“As a result, KOMIPO achieved ‘B’ grade in the government’s management assessment - a three-grade jump from last year,” he says. Asian Power caught up with CEO Chung Chang-kil as he discusses the company’s current challenges and expected wins. He was also named the CEO of the Year in the Asian Power Awards 2016.

It has been five months since you took over the role, what do you think makes your leadership unique?

There are many things that I have felt as CEO whilst directly visiting field sites, conversing with employees and listening to the difficulties of various business units over the past five months with an emphasis on communication as the top priority of my management style.

I found that in the field, employee morale had fallen far more than I expected due to the relocation of KOMIPO’s head office and the government’s continuous undervaluation of the company.

To find solutions to the company’s development direction, I have made a conscious effort to increase frank dialogue and kinship with field employees.

As a result, KOMIPO achieved ‘B’ grade in the government’s management assessment — a three-grade jump from last year. When I heard that the morale of KOMIPO executives and employees has improved considerably owing to the achievement, I felt rewarded.

With this as momentum, I intend to realise the most excellent grade in the 2016 government management assessment through the accident-free innovation movement, fuel cost saving, etc., and lead the company to another takeoff.

What are your future management concepts, plans, and resolutions for KOMIPO?

I plan to carry out the company’s mission to supply stable and economical electric power, proactively respond to environmental changes, expand sustainable growth engines, and take the lead in the future energy industry, based on true communications with executives and employees as well as with customers.

To accomplish this, with ‘Faithful to the Basics,’ ‘Open Management,’ and ‘Sustainable Growth’ as my management guidelines, I will sharpen the company’s capabilities with a focus on results.

According to the results of the government’s management assessment for public organisations announced recently by the Ministry of Strategy & Finance, KOMIPO rose three grades compared with 2015. What led the firm to the achievement?

KOMIPO faced a de-facto management crisis with the announcement of the government’s 2014 management assessment results. However, the company, with the
implementation of field-centric management, including a company-wide accident-free innovation campaign, development of a data-based fault prediction system, and intensive management of subpar facilities, achieved the highest facility reliability level to earn a significantly enhanced grade in the most recent management assessment.

Also, the company purchased a generation fuel, LNG, from abroad at cheaper prices for the first time amongst domestic power companies and reduced the people’s burden. The fact that KOMIPO created about US$16m (KRW20b) in net profit from construction and operation of power plants in Indonesia also was a factor in the company scoring higher points, I think.

The result was the fruit of all employees having agonised and endeavoured together in every field with one mindset to prepare a second takeoff of the company. Going forward, KOMIPO will solidify its position as a leading organisation, fulfilling its responsibilities such as supplying stable power to the people.

In the case of coal-fired thermal power plants, two rabbits should be caught at the same time, namely, eco-friendly and high-efficiency power plants. Please introduce the measures that you are taking in this area.

Recently, new coal-fired thermal power plant technologies have been developed steadily. Joining this trend, KOMIPO is doing its best in constructing Shin-Boryeong TPP #1 & #2 at present. Owing to these technologies, the efficiency of Shin-Boryeong TPP will be about 1.3% greater compared to the existing Boryeong TPP #7 & #8 and produce electric power consuming less coal, so this power plant is expected to reduce GHG emissions by about 530,000 tons.

KOMIPO plans to build not only the Shin-Boryeong TPP but also Seoul CCPP, Jeju LNG PP, and Shin-Seocheon TPP as eco-friendly and high-efficiency power plants with the world’s top technologies. With regard to fine dust, KOMIPO is exerting utmost efforts to prevent environmental pollution, operating the latest environmental
pollution prevention facilities and discharging effluents at a much lower level than required.

What is the status of your overseas projects and what are your future plans in this area?

With the construction and operation of Cirebon coal-fired TPP (660MW) in Indonesia as the start, KOMIPO is carrying out diverse overseas power generation businesses, including O&M of Tanjung Jati TPP (1,320MW) in Indonesia and Navanakorn CCPP (110MW) in Thailand.

Amongst the projects, the construction and operation of the Cirebon TPP, a representative success case in the overseas advance of Korean power generation
businesses, began a 30-year long-term project with its dedication in July 2012 as the start. This project consists of constructing and operating a 660MW thermal power plant after KOMIPO’s organisation of a consortium with Japan’s Marubeni Corp. and Indonesia’s Indika.

From the perspective of being the first overseas coal-fired power plant project won by a domestic public power company, it enables us to evaluate KOMIPO’s global position.

KOMIPO is already operating two units of a 660MW-class power plant at Tanjung Jati in Indonesia, and through operating of two power plants in the country, the company has taken a firm position as a core organisation supplying 7% of the total electric power for Java Island, which has suffered from chronic electric power shortages.

In 2015, KOMIPO created US$14m (KRW16.5b) in revenue from the Cirebon TPP construction and operation business and cumulative net profit reached US$42.4m (KRW50b). Also, with overseas business achievements being realised in multiple sectors, KOMIPO realised about US$14m (KRW16.5b) of profit in 2015 alone, and expects to earn US$25.4m (KRW30b) in power plant operating profits annually over the next 30 years.