Posted : 2011-10-06 11:27
Updated : 2011-10-06 11:27

NK demands $5.7 bil. over failed energy project

North Korea has demanded $5.7 billion in compensation for a failed light-water reactor project that was partly funded by South Korea, an official said Thursday.

The move comes in response to repeated demands by the Korean Peninsula Energy Development Organization (KEDO) that North Korea compensate it for the project, which collapsed in 2006 over concerns about the country's nuclear weapons development, the government official said on condition of anonymity.

KEDO, an international consortium of South Korea, Japan and the United States, launched the project to build two commercial reactors under a 1994 agreement between Pyongyang and Washington. In 2002, North Korea was reported to be running a secret uranium enrichment program, prompting a suspension of crude oil supplies to the North and its eventual withdrawal from the Nuclear Nonproliferation Treaty the following year.

"North Korea recently sent a written reply to KEDO, claiming that they should be the ones to receive compensation," the official said. "The North's demand is nonsense, as the project was suspended over its nuclear weapons programs."

South Korea, which agreed to shoulder 70 percent of the project costs, has yet to repay a 1.3 trillion won ($1.1 billion) loan and added interest, while the amount of interest on government bonds issued to cover the debt has snowballed to more than 900 billion won, according to a government report released last month.

North Korea conducted two nuclear tests in 2006 and 2009, and revealed the existence of a uranium enrichment facility in November last year, adding urgency to international efforts to stop Pyongyang's nuclear weapons development. (Yonhap)

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