The Korea Times close
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
Business
  • Tech
  • Bio
  • Companies
Finance
  • Companies
  • Economy
  • Markets
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to President
  • Letter to the Editor
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
Entertainment
& Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
Sports
World
  • SCMP
  • Asia
Video
  • Culture
  • People
  • News
Photos
  • Photo News
  • Darkroom
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
  • The Korea Times
  • search
  • Site Map
  • E-paper
  • Subscribe
  • Register
  • LogIn
search close
Business
  • Tech
  • Bio
  • Companies
Sun, May 22, 2022 | 01:17
Energy
KEPCO Vietnam investment 'feasible' despite expected losses
Posted : 2020-06-11 16:56
Updated : 2020-06-11 20:45
Print Preview
Font Size Up
Font Size Down
The Korea Electric Power Corp. (KEPCO) head office in Naju, South Jeolla Province. / Courtesy of KEPCO
The Korea Electric Power Corp. (KEPCO) head office in Naju, South Jeolla Province. / Courtesy of KEPCO

By Nam Hyun-woo

Korea Electric Power Corp.'s (KEPCO) investment in a Vietnamese coal fire power plant was approved in a pre-feasibility study despite expected losses stemming from the project, according to officials, Thursday.

According to Korea Development Institute (KDI) data revealed by Rep. Kim Sung-whan of the Democratic Party of Korea and Solutions for Our Climate, the net present value of the project, Vung Ang 2, was estimated at minus $158 million in the study.

This means outgoing cash is expected be greater than incoming cash during the project period of 2020 to 2048.

KEPCO's part in the Vung Ang 2 project would see the South Korean state-run firm build two 600-megawatt coal-fired power plants in Ha Tinh Province, Vietnam. The total cost is $2.24 billion and KEPCO is apparently aiming to join the project by acquiring a 40 percent stake in it from China Light & Power (CLP) for 220 billion won ($18.4 million).

Given KEPCO's interest in the project, the value of its planned investment will stand at minus $80 million, the KDI anticipated. In South Korea, a project worth more than 50 billion won by a public institution is required to pass a KDI feasibility study.

Despite the bleak profitability outlook, the KDI approved the project in March, according to KEPCO.

"The KDI feasibility study reviewed both quantitative and qualitative factors simultaneously," a KEPCO official told The Korea Times, adding the qualitative factors in this case would be the Korean company's advance into the Vietnamese market.

"Also, the KDI standard for measuring a project's value is excessively conservative, so it usually approves projects whose profitability indices are below 1."

The profitability index is calculated by dividing the present value of total income by the present value of total expense. A reading below 1 means expenses are greater than income. The profitability index of the overall project was 0.96 and that of KEPCO's investment 0.95.

Thanks to the KDI's approval, KEPCO is expected to gain board approval for the investment.

Global investors have already raised questions about the Vung Ang 2 project. CLP was seeking to sell its stake to KEPCO to focus on eco-friendly businesses, and top investment banks including Standard Chartered of the U.K., OCBC and DBS of Singapore have already exited the project.

"With the Vung Ang 2 project found unprofitable, KEPCO should not pursue its investment plan," Rep. Kim said. "Given the global downtrend of renewable energy prices, the project's actual yield in the future will be much aggravated from the current anticipation."

KEPCO has been investing in several coal-fired power station projects. Earlier this week, the KDI approved KEPCO's investment in an Indonesian coal-fired power plant project, despite doubts from global investors. In February, Blackrock sent a letter asking KEPCO to reveal its "strategic reasons" for pursuing the Indonesian and Vietnamese projects.


Emailnamhw@koreatimes.co.kr Article ListMore articles by this reporter
 
  • Adoptee's journey tracing her mother, origin and heritage
  • What to expect from first lady in summit diplomacy
  • Can Indo-Pacific help Korea reduce reliance on Chinese market?
  • Shocking treatment: Electricity in 19th-century medical treatment
  • Blinken remains elusive figure for Yoon administration
  • Korea-US summit expected to play role in each other's domestic elections
  • Biden's summit with Yoon to boost chip, battery, nuclear power stocks
  • Korean steelmakers unlikely to benefit from Biden's visit
  • Yoon appoints Han as prime minister after parliamentary confirmation
  • Fintech businesses yield both innovation and inclusion: Fintech Industry Association
  • Reality shows raise concerns by zooming in on private lives of people Reality shows raise concerns by zooming in on private lives of people
  • TvN drama 'Rose Mansion' criticized for animal abuse scene TvN drama 'Rose Mansion' criticized for animal abuse scene
  • 2 artists of Korean descent question hegemonic frameworks of race, gender 2 artists of Korean descent question hegemonic frameworks of race, gender
  • Jung Hye-sung to lead new series 'New Normal Zine' Jung Hye-sung to lead new series 'New Normal Zine'
  • Korean remakes, romance series to hit small screen in June Korean remakes, romance series to hit small screen in June
DARKROOM
  • People in North Korea trapped in famine and pandemic

    People in North Korea trapped in famine and pandemic

  • 2022 Pulitzer Prize: Bearing witness to history

    2022 Pulitzer Prize: Bearing witness to history

  • Worsening drought puts millions at risk

    Worsening drought puts millions at risk

  • Our children deserve the best

    Our children deserve the best

  • End of mask mandates

    End of mask mandates

The Korea Times
CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Location
  • Media Kit
  • Contact Us
  • Products & Service
  • Subscribe
  • E-paper
  • Mobile Service
  • RSS Service
  • Content Sales
  • Policy
  • Privacy Statement
  • Terms of Service
  • 고충처리인
  • Youth Protection Policy
  • Code of Ethics
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group