By Do Je-hae
Staff Reporter

A barrage of domestic news reports have highlighted the Dec. 27 Korea-United Arab Emirates (UAE) contract, pointing out that a Korean consortium is scheduled to design, build and operate nuclear power plants for the Middle East country's energy program for the next 60 years.

As the first case of Korea's export of nuclear technology, there is no doubt that the multibillion-dollar contract is a major economic, technological and diplomatic achievement for the country, which built its first commercial nuclear plant in 1978.

However, a closer look at foreign media reports, including those from the UAE, indicates that the deal is not as lucrative as projected by the domestic reports.

One of the most glaring discrepancies between domestic and foreign reports is the exact size of the contract procured by the Korean consortium - led by the Korea Electric Power Corp. (KEPCO) - to provide four APR1400, a Korean-made nuclear power unit that has yet to make a domestic debut.

Following a decision that selected Korea over France as the winner of the largest-ever energy deal awarded in the Middle East, the Emirates News Agency reported that "the value of the contract for the construction, commissioning and fuel loads for four units equaled approximately $20 billion, with a high percentage of the contract being offered under a fixed-price arrangement."

However, the headlines in the domestic press rushed to report that the deal was worth $40 billion.

According to a New York Times report, the deal would be worth that much only if "the initial four plants are successful and the arrangement is extended."

"The initial deal is worth $20 billion," confirmed an official with the nuclear energy industry division of the Ministry of Knowledge and Economy.

So where does the discrepancy come from?

"The value of the contract for the construction of the four APR-1400 civil nuclear power units is worth approximately $20 billion, and an additional $20 billion can be expected from the maintenance and other supporting activities related to the operation of the completed four units for the next sixty years. It was the media that reported it as being worth $40 billion," the ministry official explained.

KEPCO officials contacted for this report were not available for comment, as they are currently participating in additional negotiations in Abu Dhabi from Jan. 11 to 13.

"There are reports that the initial successful bidder will likely take over subsequent bids to be finalized in 2018 and 2019, but such prospects are uncertain," Lee Hun-seok, representative of Energy Justice Action, a Seoul-based environmental civic group, said in a recent statement.

As the power plants to be housed in the UAE are still undergoing construction and have not been commercialized domestically, the Korean side is likely to be responsible for shouldering costs related to possible accidents arising from operational deficiencies in the future, he added.

The first of the APR1400 units is now under construction, having obtained a permit from the Korean regulatory authority.

Major news outlets here have been issuing unbalanced and overly favorable reports not only regarding the size and economic prospects of the deal, but also President Lee Myung-bak's role in securing the contract. Some have stated that the deal is the outcome of his signature "pragmatic diplomacy."

A recent poll released on Dec. 29 showed that Lee's popularity soared directly after the deal, with 53.1 percent of the respondents showing support for his administration, a 7.2 percent increase from the previous week.

Another fact that the domestic press has largely overlooked is the deal's "fixed priced arrangement," which stipulates that the Korean side will have to shoulder any overrunning operational charges, which are routine in projects of such magnitude.

jhdo@koreatimes.co.kr