KEPCO CEO Kim Ssang-soo

KEPCO Takes Power Plant-Building Business to the World

By Kim Hyun-cheol
Staff Reporter

The Korea Electric Power Corp. (KEPCO) made a deal this month with the Ecuadorian government for cooperation in the electricity sector of the Latin American country.

Under the deal, the first overseas one since current CEO Kim Ssang-soo took office in August, KEPCO will build power stations and electric power transmission and distribution networks for the company to expand its market presence in Central and South America.

``It is meaningful for Ecuador, which has abundant water and other natural resources, and South Korea with technologies and experience in the electricity industry for cooperation in projects like this,'' Kim said in Quito, Ecuador's capital.

Around the same time, the company made other offers to several African countries to come forward with proposals and projects for assistance in a bid to fix their troubled energy industries, during the Korea-Africa Economic Cooperation Conference in Seoul.

``KEPCO wishes to share knowledge and experience with and transfer technologies and skills in developing countries in Africa to help ease their suffering and hardship coming from the shortage of electric power,'' Lee Young-ha, KEPCO's director-general of Euro-America business department, was quoted as saying.

Recent moves of the company have been somewhat unconventional ― already one of the nation's largest companies, supplying more than 96 percent of electricity in South Korea, KEPCO has been actively engaged in pushing their boundary to overseas markets.

KEPCO announced a roadmap for overseas business in November last year, where it clarified a blueprint to become Asia's no.1 electric power company within a decade.
Under the vision of ``2015 Asia's Best Value Developer in Energy Services,'' it aims to secure global status as a representative power company through quality services in all of its business departments.

Should it proceed as planned, the company will reach 3.8 trillion won ($2.6 billion) in overseas sales, as well as producing 10,000 megawatts in foreign power generation by 2015.

KEPCO aims to largely expand its current level of overseas showings ― 200 billion won in sales and 2,400 megawatts in power generation ― through concentrating more of its capacity on foreign businesses. The master plan for the goal includes a close analysis of foreign market situations and detailed target levels for each phase of the long-term project.

Several reasons have made the company look outside Korea.

Most of all, circumstances are highly fluctuating at home. Growth of domestic demand for electricity remained in double-digits in the last decade, but is now falling sharply because of the slowing economy and changes in the country's industrial structure.
Growth this year is predicted to be around 4 percent, and fall to near 1 percent after 2010.

Expansion of private firms into the business is also gaining momentum with policies such as direct transactions of electricity, allowing more space for private companies in the market. By 2015, over 10 percent of the domestic electric power market will be occupied by private operators.



On the other hand, a lot of territories in foreign markets still remain undeveloped. Demand is constantly rising in most emerging markets, and business opportunities are increasing thanks to deregulations in power-related businesses there.

KEPCO's overseas advancement traces back to the 1990s, when it started to look at Asian markets in an attempt to cope with stalled growth on the domestic market.

In 1995 and 1996, the company won consecutive bids for two projects in the Philippines, including the Illijan Thermal Generation Project, which was the world's biggest project at that time. The Ilijan Power Plant was named the global power plant of the year by ``POWER,'' a renowned U.S. magazine.

The next target was China, where well-known power generators are engaged in a fierce competition, predicting the country's huge growth in the future. KEPCO is currently operating a mine-liaison generation project in Xanxi Province and another wind power project in Gansu Province.

Following Gansu, the company completed a 1,390-megawatt wind power plant in a joint venture with China's Datang Corporation, one of the two largest power generation companies in China, commercial operation of which started in December 2006. Banking on these success, KEPCO looks to become the largest foreign wind power generator in China.



KEPCO is also aggressively targeting new markets in the Middle East and Africa.

In December 2005, KEPCO won a contract for the operation and management of an 870-megawatt combined-cycle thermal plant in Lebanon, and took over the plant in February 2006. The next year it won a contract in Nigeria for the construction and operation of a 2,250-megawatt gas power plant and a 1,200-kilometer gas pipeline as well as oil drilling rights covering an estimated reserve of two billion barrels.

KEPCO is on the lookout for new and renewable energy through its engagement in clean development mechanism (CDM) businesses like the Chinese wind power generation project, and through the acquisition of CO2 emission credits.

The company plans to continue pursuing the clean energy development business, and construction and operation of nuclear power plants as new growth engines.

In addition, KEPCO has successfully completed technical service projects designed to improve the transmission-distribution facilities in Myanmar and Libya, diversifying its business to the transmission-distribution sector.

The overall foreign revenues of the country stood at over 1.4 trillion won in 2007, with net profit around 600 billion won. KEPCO says this is remarkable outcome, considering it is a state-run firm with a short experience of working overseas.

The turning of the new century saw KEPCO's newly added contribution to a new inter-Korean cooperation.

After being designated the official electricity supplier for the Gaeseong Industrial Complex in North Korea by the government and the business project operator Hyundai-Asan, KEPCO signed an agreement with North Korea's Central Zone Development Bureau on the amount of electricity to be supplied and distribution systems.

March 16, 2005 was a truly momentous day in the company's history, as electricity produced by South Korea was supplied to North Korea for the first time since the Korean War.

Since then, KEPCO has been supplying 15,000 kilowatts of power to the Gaeseong complex through its distribution facilities. It will do its best to supply electricity satisfactorily once full-scale supply of electricity to North Korea commences, the company said.

hckim@koreatimes.co.kr

Who’s CEO Kim Ssang-soo? Korea Electric Power Corp. CEO Kim Ssang-soo served as the vice chairman of LG Group and an advisor of LG Electronics before he took his current position in August. Having graduated from Hanyang University with a bachelor’s degree in mechanical engineering, Kim started his career at LG in 1969, and made his way to become the vice chairman of the conglomerate at the end of his 38 years at Korea’s top electronics company.