Korea to merge 109 public institutions (September 3, 2026) — 524 bodies become 415
The South Korean government announced a public institution reform plan on September 3, 2026 covering 109 public bodies and subsidiaries, cutting the total number of public institutions from 524 to 415, a reduction of about 21 percent. The plan runs in three directions. Consolidations include the five state power generation companies spun out of KEPCO in 2001 being recombined into a single entity provisionally named Korea Power Generation, Korea National Oil Corporation merging with Korea Gas Corporation into an energy resources corporation, the four port authorities of Busan, Incheon, Ulsan and Yeosu-Gwangyang becoming one national port corporation, and Korail merging with SR. Moving the other way, Korea Land and Housing Corporation would be split into a development company handling land and construction and a housing welfare company handling public rental housing. Korea Coal Corporation would be liquidated. The government said employment would be transferred and conditions would not deteriorate
The three lines
- Scale — 109 institutions and subsidiaries affected; the count falls from 524 to 415, about 21 percent
- Direction — power, oil and gas, ports and rail consolidate; LH is split in two; coal is wound up
- Obstacle — most changes need legislation, so the National Assembly decides the outcome
Key questions
- Which institutions are affected?
- **One hundred and nine, in three groups.** The government's own classification is **15** bodies for strategic restructuring, **11** for consolidation of overlapping functions, and **83** subsidiaries and small institutions to be absorbed. The third group is mostly obscure subsidiaries; the visible changes are in the first two. The named cases: the **five power generation companies** — Korea South-East Power, Korea Midland Power, Korea Western Power, Korea Southern Power and Korea East-West Power — merge into a single body provisionally called **Korea Power Generation**. **Korea National Oil Corporation and Korea Gas Corporation** merge into an energy resources corporation. The **four port authorities** of Busan, Incheon, Ulsan and Yeosu-Gwangyang merge into a national port corporation, with the existing four becoming **regional branches** running locally specialised business. **Korail and SR**, which today split operation of the high-speed rail network, merge. **Korea Land and Housing Corporation (LH)** goes the other way and is split in two. **Korea Coal Corporation** is liquidated. Museums, science centres and other exhibition institutions are consolidated by ministry, and the Daegu-Gyeongbuk and Osong advanced medical foundations merge.
- Why recombine the power companies that were deliberately separated?
- **Because the government judges that the reason for separating them no longer holds.** The five generators were split out of Korea Electric Power Corporation in 2001 under an electricity market restructuring, with the stated goal of introducing competition in generation and building a foundation for eventual privatisation. In practice all five operated under the same rules, in the same wholesale market, on the same settlement mechanism, and the competition was limited. What did materialise was **five sets of head office functions, and five sets of procurement, research and overseas operations**. The government's case is economies of scale and removal of duplication. The merged entity would also gain **a renewable energy division and a just transition division** — the argument being that phasing down coal generation and expanding renewables is better handled once than five times. **The counter-argument is equally clear**, and it was the case for the 2001 split: without competition, cost discipline weakens, and a single generation monopoly has more leverage over tariffs and procurement.
- What happens to the employees?
- **The government committed explicitly to transferring employment.** Vice Minister of Economy and Finance Heo Jang said that, excluding executives, **employment will be carried over**, that **pay and other conditions will not deteriorate** across the reorganisation, and that welfare provisions would be strengthened alongside management evaluation incentives. Three things were left unaddressed. **New hiring** — existing jobs may be protected while the merged headcount ceiling falls, which reduces recruitment; the announcement said nothing about this. **Pay harmonisation** — when institutions with different pay scales merge, whether the lower is raised to the higher or each is maintained determines the actual wage bill. **Location** — many of these institutions were relocated to regional cities under earlier decentralisation policy, so where a merged headquarters sits has direct regional employment consequences. For the ports, the government addressed this by keeping the four existing authorities as **regional branches with locally specialised functions**. No comparable detail was given for the power generators or for the oil and gas merger.
On September 3, 2026 the South Korean government published a public institution functional reform plan: 109 public bodies and subsidiaries to be merged, split or wound up, reducing the count of public institutions from 524 to 415 — about 21 percent.
The most striking item is the recombination of the five power generation companies. Split out of Korea Electric Power Corporation in 2001, they would be folded back into a single entity provisionally named Korea Power Generation. It reverses the direction of a policy set 25 years ago.
1. Three directions, not one
This is not a uniform exercise in shrinking.
| Direction | Bodies | Outcome |
|---|---|---|
| Merge | South-East, Midland, Western, Southern, East-West Power | Korea Power Generation (working title) |
| Merge | Korea National Oil Corp + Korea Gas Corp | Energy Resources Corporation (working title) |
| Merge | Busan, Incheon, Ulsan, Yeosu-Gwangyang port authorities | Korea Port Corporation; the four become regional branches |
| Merge | Korail + SR | Single high-speed rail operator |
| Merge | Daegu-Gyeongbuk and Osong advanced medical foundations | One foundation |
| Split | Korea Land and Housing Corp (LH) | Housing & Urban Development Corp + Housing & Urban Asset Corp |
| Liquidate | Korea Coal Corporation | Wound up |
| Deferred | Incheon Airport Corp, Korea Airports Corp | Reviewed after regional airport measures |
By count, the plan is 15 strategic restructurings, 11 consolidations of overlapping functions, and 83 subsidiary and small-institution mergers. The 83 are mostly bodies the public has never heard of; the political argument will be about the first 26.
2. Why LH goes the other way
Everything else consolidates. LH splits. The rationale is that one organisation currently holds two roles that pull against each other.
- Housing & Urban Development Corporation — land development and housing construction. It buys land, develops and sells; profitability is the natural yardstick.
- Housing & Urban Asset Corporation — housing welfare and asset reserves. Public rental supply and support for vulnerable households; not making a profit is the normal condition.
When one entity does both, development profit subsidises welfare provision, which becomes pressure to keep generating development profit. Separating the legal entities allows each to be measured against the right standard, according to the government's explanation.
The split also divides accountability. LH has carried new town supply, purchases of homes affected by deposit fraud, and construction defect scandals all under one name.
3. It has to pass the National Assembly
The announcement does not execute itself. Ministries will submit detailed plans to the Public Institution Steering Committee, and the government will negotiate the necessary enabling and amending legislation with the National Assembly. Institutions that need no legal change proceed immediately.
The power generators, the oil and gas corporations, the port authorities and LH each exist under their own founding statute. Without amendment, neither the mergers nor the split is possible. This announcement is therefore as much a legislative agenda as an execution plan, and the composition of the National Assembly determines the outcome.
One dispute is already on the record: the difference in financial structure between the oil and gas corporations. Their debt and asset profiles differ substantially, raising both the burden of merger and the prospect of shareholder objection. Vice Minister Heo Jang said the government would take that into account while maximising synergies. Korea Gas Corporation is a listed company, so minority shareholder treatment will require a mechanism — and none was announced.
4. Employment: what was promised, what was not
Heo Jang was explicit. Excluding executives, employment will be transferred; pay and other conditions will not fall; welfare provisions will be strengthened and management evaluation incentives applied.
What was omitted is equally clear.
- Recruitment volume — protecting existing jobs is compatible with a smaller merged headcount ceiling and fewer new hires. No comment.
- Pay harmonisation — merging institutions with different pay scales requires a decision on whether to level up or maintain separately. This determines the real wage bill.
- Headquarters location — many of these bodies sit in regional cities under earlier decentralisation policy. For the ports, the plan keeps the four authorities as regional branches with locally specialised business. No equivalent commitment was made for the power generators or the energy merger.
5. What is unresolved
- No fiscal saving estimate and no deadline. Neither the expected financial effect of removing 109 bodies nor the completion timetable was published.
- The cost of ending competition. The 2001 split was justified by competition. What replaces that discipline — management evaluation, tariff regulation, something else — has not been set out.
- The airports were excluded. Incheon International Airport Corporation and Korea Airports Corporation are deferred pending regional airport measures.
- The next checkpoint is the date detailed ministry plans reach the Public Institution Steering Committee. Those documents will contain the headcounts, locations and schedule.
Sources
- Financial News — Merging the five power generators and splitting LH: government to consolidate 109 public institutions
- MoneyToday — Government to cut 109 public institutions; five power generators and four port authorities to merge
- Ajunews — 109 public institutions to go: power generators and oil and gas merge, LH is split
- Hankyung — Five power generators to merge as 109 public institutions are cut
- Asiae — Major surgery on 20 percent of public institutions: 109 merged, five generators become one
- Kyongbuk Ilbo — 109 public institutions to be cut; Daegu-Gyeongbuk and Osong medical foundations merge