[ Investment > The Ombudsman's Office At Work ]

hodia Polyamide¡¯s plan was ambitious. Two years after French parent Rhodia had bought out the engineering plastics business of the Hyosung Group in January 1999 to create the company, it had become a leading supplier in Korea for consumer and industrial goods applications.
  Business was so good that it planned to double production of nylon and polyurethane raw materials at its Ulsan plant during 2001. This would, of course, entail providing additional electrical power. Specifically, Rhodia engineers wanted to replace the plant¡¯s existing 17kV power line with one carrying 22.9kV to accommodate the additional demand for electricity when the new plant came on stream, and use both power lines while the expansion went ahead. Rhodia¡¯s plans, however, ran up against the regulations of national power provider, KEPCO (Korea Electric Power Corp.) that stated a plant could have only one power supply line, not two, regardless of whether an expansion was in the works or not. This meant that Rhodia Polyamide would be required to shut down its operations while the second power line was being installed, a process that would take four months.

   AVOIDING A SHUTDOWN Rhodia Polyamide vice president and Ulsan plant manager Jean-Marc Fisher immediately protested to KEPCO that a fourmonth shutdown would result in a loss of output amounting to $4 million. The power company¡¯s response was far from encouraging. ¡°They told us that if we wanted to use two lines we would have to form a second company,¡± said Mr. Fisher. ¡°That would be crazy and expensive.¡±
  At this point, the company business director approached Ahn Young-Sub, a counselor with the O ffice of the Investment Ombudsman to resolve the difficulty. After due analysis of the situation, Mr.Ahn, made recommendations to KEPCO to the effect that the regulation in question be suspended to allow Rhodia Polyamide¡¯s temporary use of dual transmission lines. He pointed out that the company made a big contribution to the local and national economies, employing over 200 workers, and exporting half its output. Furthermore, Mr. Ahn pointed out that Rhodia proposed to invest a further $200 million in Korea to establish the country as the hub of its Asian operations. Again the response was not encouraging.
   ¡°They strongly rejected my recommendations,¡± said Mr. Ahn. ¡°Usually, KEPCO never allows a company to have more than one power line.¡±

   BETTER CLOUT Undaunted, Mr. Ahn put forward his recommendations to the Ministry of Commerce, Industry and Energy (MOCIE), the parent ministry of the Ombudsman Office through the Korea Trade-Investment Promotion Agency (KOTRA). As a ministry, MOCIE would have more clout in dealing with state-run KEPCO. ¡°MOCIE was in favor of our position,¡± said Mr. Ahn. ¡°After receiving our recommendations, ministry officials conferred with KEPCO together with the Ombudsman¡¯s Office. The upshot was that MOCIE strongly recommended to KEPCO that Rhodia Polyamide be allowed to use two lines for up to six months.¡±
  KEPCO responded positively to MOCIE¡¯s recommendation with the result that Rhodia Polyamide could undertake its expansion without shutting down its operation. Mr. Fischer noted there were no changes to the KEPCO regulation, only a temporary suspension and that the company will face the same challenge in regard to its next investment project.
  When the time comes, though, the Office of the Investment Ombudsman will once again be ready to use its analytic and organizational skills to bring the full weight of the government behind Rhodia Polyamide in its efforts to consolidate its position in Korea.