Competition heats up as local governments vie for merged state agencies

A fierce competition is unfolding across South Korea as local governments fight to host public companies that the government plans to merge and relocate outside the Seoul metropolitan area. The stakes are especially high because municipalities could lose agencies whose headquarters already anchor their local economies.

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The energy resources corporation should be based in Ulsan.

Ulsan and Daegu are openly sparring over the proposed merger of Korea National Oil Corporation and Korea Gas Corporation into a tentatively named Korea Energy Resources Corporation. Ulsan Mayor Kim Sang-wook said the new agency should be based in Ulsan, which he described as a complete energy ecosystem spanning oil and gas, ammonia, hydrogen and wind power.

Daegu argues that the larger Korea Gas Corporation should form the centre of the merger. The city said the gas company had 4,305 employees and revenue of about 35 trillion won last year, compared with 1,456 employees and roughly 3 trillion won for the oil company. Daegu is also highlighting housing costs and its medical, educational, cultural and transport infrastructure.

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Ulsan has the strongest competitiveness because it has a complete ecosystem that stores, produces, processes and directly uses both traditional and future energy.

The contest is also intensifying over the headquarters of a proposed merged power company, tentatively called Korea Power. The company would combine five state power firms, with about 1,800 headquarters staff expected to work at the new entity, down from roughly 2,400 across the five existing headquarters. South Chungcheong, Busan, Ulsan and South Gyeongsang, which currently host those offices, are competing in what the article describes as a zero-sum contest. Naju is promoting links with power-sector agencies already located there, while lawmakers from North Jeolla have proposed placing major offices and a renewable-energy transition headquarters in the province.

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Considering the organisational scale and operating system, supply-chain control capabilities, and policy continuity, the centre of the merger should be Korea Gas Corporation, and Daegu is the most suitable location for the headquarters.

South Gyeongsang and Jinju are also seeking to keep both companies expected to emerge from the division of Korea Land and Housing Corporation. They warn that splitting the agency could damage the local industrial ecosystem and weaken the innovation city. Meanwhile, unions and civic groups are opposing the planned consolidation of four port authorities in Busan, Incheon, Ulsan and Yeosu-Gwangyang, citing concerns including damage to regional decentralisation.

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If Korea Land and Housing Corporation is split, the regional industrial ecosystem will inevitably be damaged and the foundations of production and consumption will be shaken.