The government revealed its long-awaited plans Friday to improve the country’s railroad services that will lead to a de facto breakup of the state-run Korea Railroad into three separate companies by 2017.

According to the Ministry of Land, Infrastructure and Transport, KORAIL will first set up a new subsidiary before the end of this year that will handle the operation of a new KTX express train service set to be launched in 2015.

It will then set up a new subsidiary next year to handle the operation of its cargo trains.

KORAIL itself will act as a holding company after it establishes two separate subsidiaries in 2015 and 2017 to handle train repair and maintenance services, the ministry said.

Such a move follows similar recommendations made by a civilian review committee late last month.

Earlier proposals had included naming a private company to handle the operation of the new KTX train services as a way of introducing market competition in the industry that is currently monopolized by the state-run KORAIL.

The government, based on recommendations from the review committee, said it will instead encourage competition between the two subsidiaries of KORAIL that will each operate different sets of KTX train services.

The ministry claimed such a reform will help save up to 620 billion won ($550 million) annually while also lowering train fares.

The plans were set to be introduced at a public hearing on Friday, but the hearing was blocked by a group of unionized workers, who said they opposed the privatization of railroad services and accused the government of trying to hand over lucrative businesses to large conglomerates. (Yonhap News)