Aiming to Be 3rd in the Global Quality Index

The Korea Rail Network Authority (KRNA) is a state-owned enterprise (SOE) established for the construction and management of railroad facilities, contribution to the convenience of the people using trains and acceleration of the growth of the national economy.

Since chairman & CEO Kim Kwang-jae took office in August 2011, it has reorganized its structure for more rational and efficient management and declared the 2020 Global New Vision. Once the vision is achieved by 2020, it will be in control of 4,934 kilometers of railways nationwide while the double track ratio and the electrification ratio goes up to 79% and 85%, respectively. At the same time, 20% of the conventional railroads are slated to be turned into high-speed ones by then. In doing so, the authority is aiming climb five spots to rank third on the industrial quality index of the World Economic Forum (WEF) and turn Korea into a global leader in the industry.

“We’ll minimize the waste of taxpayers’ money and our debt increase at the same time by means of advanced business management techniques so that those who use our services can enjoy improved convenience,” said the chairman, adding, “We’ll keep doing our best to boost our self-reliance by building railroad facilities, increasing profits, better utilizing and developing state-owned railroad assets and opening up overseas markets.”

Substantial Recovery of Fiscal Soundness

The KRNA has made aggressive efforts to strengthen its fiscal soundness, too. In October 2011, it held a company-wide discussion session to emphasize the gravity of its debt levels and gather ideas as to how to improve its financial conditions.

As a result, it saved 656.6 billion won in budget this year by dealing with excessive facilities such as low-demand freight trains and subsidiary main tracks while earning 114.9 billion won in profits through railroad asset utilization and overseas business diversification. Also, the company could issue 687.4 billion won less corporate bonds and reduce its debts by 600 billion won more than previously planned thanks to such efforts.

Its endeavor did not stop there. It saved 21.4 billion won by upgrading its train garages and excess facilities, 467.5 billion won by applying value engineering to vehicle design and 26.9 billion won in operating expenses and overseas construction outsourcing costs. In all, the KRNA has spent 1,275.5 billion won less of its budget in 2012 to optimize its business status.

In addition, the authority repaid 41.5 billion won in interest on borrowings and cut its net loss by 126.1 billion won in 2012. By issuing low-interest long-term bonds, it saved interest costs worth four billion won while converting its high-interest, government-sponsored bonds into low-interest ones to save two billion won more. At present, the KRNA is the only SOE in Korea with an Aa3 credit rating obtained from overseas credit rating agencies such as Moody’s.

Endeavor for MBWA and Zero Accident

The authority is focusing also on its zero-accident record and further raising its safety standards. “When you hit a snag, you can find the answer on site, not at your desk, which means you have to check things with accuracy working in the field,” the chairman had said several times while working for the Ministry of Construction and Transportation and its successor, the Ministry of Land, Transport and Maritime Affairs.

Since his appointment as the head of the authority, chairman Kim Kwang-jae has visited 217 construction sites and workplaces every weekend and at night on weekdays as an effort to forestall accidents, equipment failures, etc. In result, the KRNA could see its number of accidents decrease from 35 to 20 and six between 2010 and 2012.

Construction of Environmentally-friendly Railway Networks

Another goal the authority is working on is the construction of environmental-friendly railroads based on eco-friendly management systems. To this end, it has come up with various measures for the post environmental impact assessment, greenhouse gas reduction and energy conservation, which have earned it a government subsidy worth 1.3 billion won granted by the Ministry of Environment.

These days, the organization is moving ahead with the first solar power generation projects in the 113-year history of the domestic railroad industry at 65 train station buildings and three train depots. Once the projects are completed, they can produce 17.58 million kilowatts of electricity per year, saving 3.42 million liters of oil and reducing 10,000 tons of greenhouse gas emissions.

The KRNA is currently developing or providing a total of 12 environmental performance indices to cope with climate change. It is also striving to calculate carbon footprints at railroad construction sites, expand the clean development of high-speed trains, cut CO2 emissions and meet its energy conservation targets. Its greenhouse gas emissions for last year were 5,719 tons, 7.8% down from a year earlier.

Aggressive Expansion of Overseas Business

Chairman Kim declared in his inauguration speech that the company would record at least 200 billion won in sales through its profit-making business abroad.

It was in 2005 that the KRNA penetrated the overseas market for the first time, when it supervised the construction of the 13km pilot section along the 114km-long high-speed railway route between Suining and Chongqing, China. Since then, it has provided supervision and engineering services at 11 routes.

More recently, it won a consulting service contract last year for the railway construction project led by the Cameroonian government after years of efforts for market diversification. It clinched two more deals in the same year, too. One is a design service contract in Nepal for two subway routes as long as 136km combined, including the Simara-Bardibas section, and the other is for the economic feasibility study at the 65.9km-long mass rapid transit (MRT) route in the capital city, Kathmandu. This year, the authority signed a technical advisory agreement with the Deli Metro Rail Corporation of India for the construction of a 527km-long high-speed railway between Trivandrum and Kasargod.

In the meantime, the KRNA invited 50 or so railway officials from Indonesia, Paraguay, Cambodia and Nepal between May and November this year to provide training programs. The purpose was to impart Korea’s advanced knowledge obtained through the project management consulting projects and feasibility study services.

The authority is doing business in eight countries now, including the United States, Brazil, Vietnam and Mongolia. It has recently carried out a reshuffle, establishing a new overseas business unit, to make better inroads into global railway markets worth 26 trillion won in total. It is planning to send some employees to the Middle East and launch more training programs for global market penetration down the road, too.