More details about $20 bil. deal leaked
Korea Electric Power Corp. CEO Kim Ssang-soo, left, sign an agreement with United Arab Emirates (UAE) Nuclear Energy Corp. President Khaldoon Khalifa al-Mubarak on the $18.6 billion deal on the nuclear power plants at Emirates Palace Hotel, Abu Dhabi. Sitting behind were Korea's President Lee Myung-bak, left, and UAE President Sheikh Khalifa Bin Zayed.
/ Korea Times
By Kim Tae-gyu
The country’s nuclear power deal with the United Arab Emirates (UAE) has been dubbed as one of the most outstanding exploits of the Lee Myung-bak administration along with the successful hosting of the G20 Seoul Summit.
During the waning days of 2009, its consortium led by Korea Electric Power Corp. (KEPCO) won an $18.6 billion contract to build four nuclear power plants in the UAE by 2020 through beating favored contenders from France and the United States.
However, the high-profile contract may burden the incumbent government because suspicions continue to spring up that it offered overly generous promises to win the largest energy deal in the Middle East.
The first controversy was over the military dispatch of around 130 combat troops to the UAE after obtaining parliamentary approval last December amid an opposition boycott of the vote.
They plan to help train the special forces of the Middle Eastern state for two years. Opposition parties contended that the deployment was associated with the nuclear plant contract.
Further doubts were raised this week that Korea’s Export-Import Bank was found to have pledged to lend up to half of the $18.6 billion so that the UAE is supposed to repay the debts over almost three decades.
This infuriated opposition parties and civic groups such as the Energy Justice Actions (EJA), which is keeping an eye on the contract.
``The Seoul administration initially claimed that the mega-sized agreement is worth $40 billion. But it later said that its value is $20 billion and the amount may double in the case the UAE entrusts the plants’ operation to us,’’ EJA head Lee Heon-seok said.
``Eventually, KEPCO confirmed that the value is just $18.6 billion. Considering it has also conceded so much in other segments, I wonder whether Korea Inc. will make any money via the nuclear plant contract.’’
In this climate, opposition parties and civic groups ask for disclosure of contract terms.
``We know that the agreements between private entities cannot be unveiled. But the KEPCO case is different since it is a state-run monopoly. When it suffers from big losses, taxpayers’ money may be channeled,’’ Lee said.
``Accordingly, we require the government and KEPCO to let us know the details of the UAE contract. Otherwise, the National Assembly should delve into the case to learn its commercial viability.’’
Worse, hearsay here will abound with regard to such topics as the warranty period or additional costs ― how long KEPCO will warranty the safety of the facilities and who will take responsibility for any additional costs.
Some argue that KEPCO offered a 60 year warranty as well as pledged to undertake all additional costs.
When contacted, the Ministry of Knowledge Economy that oversees the country’s nuclear industry rebuffed such doubts.
``The warranty period is basically two years, which is 100 percent in line with global conventions. Additional costs will be divided depending on which side causes them. Plus, the export financing is a general practice,’’ a ministry official said.
``I can say that there are no clauses, which are not in tandem with the global norms. The Korea-UAE nuclear agreement is a highly viable project, which will benefit both sides over the long haul.’’
Regarding the disclosure of the contract, he said that contractors opted not to open it. Any side that violates the obligations will be liable to compensations.
French, Japanese rivals get involved?
In the meantime, an industry source who is familiar with the issue said the rumors on KEPCO tend to originate from France or Japan, the two countries that lost out in the UAE bidding process.
France’s Areva SA was widely believed to win the UAE deal back in 2009 but saw KEPCO chalk up a come-from-behind victory. Another major candidate in the GE-Hitachi consortium also failed in their bid.
``Groundless rumors keep coming from France and Japan. Many suspect that they are trying to undermine the authority of the Korean consortium so that they can win in the competition for nuclear power plants in the future,’’ the source said.
Indeed, EJA leader Lee admitted that he received much of the information from Japanese sources.