Lee Gyu-lee is a business writer at The Korea Times, focusing primarily on IT & telecommunications, the Ministry of Trade, Industry and Energy and KOTRA. Prior to this, she has covered a wide range of cultural news, from film, television and K-pop to lifestyle and fashion.
Gov’t orders probe into KHNP’s nuclear deal with US Westinghouse
Korea Hydro & Nuclear Power (KHNP) CEO Whang Joo-ho answers questions regarding its deal with the U.S.-based nuclear technology firm Westinghouse at the National Assembly in Seoul, Tuesday. Yonhap
By Lee Gyu-lee
The presidential office Tuesday ordered an investigation into allegations that the state-run Korea Hydro & Nuclear Power (KHNP) struck an unfair deal with U.S.-based nuclear technology firm Westinghouse to resolve a legal conflict that had stalled KHNP’s nuclear power project in the Czech Republic.
Presidential chief of staff Kang Hoon-sik instructed the Ministry of Trade, Industry and Energy to thoroughly examine the agreement between KHNP, the state-run utility Korea Electric Power Corp. (KEPCO) and Westinghouse, following concerns that the deal may have been unfavorable for Korea.
“KHNP and KEPCO are public entities,” presidential spokesperson Kang Yu-jung said during a briefing. “The presidential chief of staff has instructed an investigation into two matters: whether the deal with Westinghouse had a proper legal basis, and whether all the rules and procedures were followed in the signing process.”
In January, KHNP and KEPCO reached an agreement with Westinghouse to resolve an intellectual property (IP) dispute over the APR1000 nuclear reactor technology, which KHNP has been seeking to export for a construction project at the Dukovany plant in the Czech Republic.
With the final obstacle cleared, KHNP finalized the estimated 26 trillion won ($18.6 billion) deal to build two reactors in the country in June.
However, when the details of the agreement came to light on Monday, the company faced criticism for accepting unfavorable conditions to secure a quick win, despite taking on heavy financial obligations.
According to the agreement, KHNP and KEPCO must grant Westinghouse a $650 million contract for equipment and services for each nuclear reactor they export, and pay an additional $175 million in technology licensing fees.
The agreement also includes a clause preventing Korean companies from submitting export bids for reactors including small modular reactors (SMRs), unless Westinghouse verifies their technical independence. The agreement is reportedly binding for a term of 50 years from the date of signing.
Westinghouse holds the underlying reactor technology, and in 1997, KEPCO and KHNP signed a licensing deal with Westinghouse’s predecessor, agreeing to pay about $30 million over 10 years in exchange for the right to use the technology.
However, the new deal links payments to each export, potentially giving Westinghouse significant leverage over Korea’s future nuclear exports.
Also on Tueday, KHNP CEO Whang Joo-ho addressed the ongoing controversy at the National Assembly, noting the deal’s conditions are manageable despite disproportionate costs.
“As the receiving party, it’s hard to consider the terms fair,” he said. “Still, we believe the burden is tolerable and that we can generate some profit despite it.”