SEOUL, KOREA - The government proposed a plan to restructure the Korea Railroad Corp. into a holding company with a new subsidiary.

 

According to the plan "Ways for Further Development of the Railway Industry" announced by the Ministry of Land, Infrastructure, and Transportation on June 26, Korail will transform itself into a holding company structure while handing over the responsibilities of managing part of train operations and railroad car maintenance to a newly created entity.

 

The high-speed KTX lines to be departed, starting in 2015, from Suseo Station in the south of Seoul will be taken over by the new company in which Korail will own about a 30-percent stake. For the remaining shares, Korail will allow major public pension funds, such as the National Pension Service, to be stakeholders.

 

Last year the ministry had announced a plan to privatize the state-run railroad company by establishing an entity with private stakes of more than 51 percent, which caused an uproar for fear of deterioration in service quality and a rise in fare rates. This time around, accordingly, the ministry's plan is free of private-sector participation. Instead, it allowed for private contractors to participate in a limited number of new railway line construction projects through public biddings.