K-water's hydropower project secures funding

K-water CEO Lee Hak-soo, fifth from left, poses with Solomon Islands Prime Minister Manasseh Sogavare, fourth from left, and other dignitaries during the opening ceremony of Tina Hydropower Limited in Solomon Islands, June 5. / Courtesy of K-water

By Kang Seung-woo

The Korea Water Resources Corp.'s (K-water) infrastructure development project in the Solomon Islands is set to hit the road in earnest after securing a $200 million (233 billion won) financing agreement from six investors.

Tina Hydropower Limited (THL), a company formed by K-water and Hyundai Engineering, will build a 15-megawatt hydropower plant as part of the Tina River Hydropower Project on the Tina River, some 20 kilometers southeast of Solomon Islands' capital, Honiara, at a total cost of $211 million over the next five years. The construction is expected to begin next year.

According to the state-run utilities company, Tuesday, the project, aimed at delivering cheaper power to Honiara, won the financial package comprised of loans and grants, Dec. 12, after meeting more than 100 preconditions from the six institutions including the environmental feasibility study, land compensation and licensing.

The six investors are the World Bank's International Development Association (IDA), the Green Climate Fund (GCF), Korea's Economic Development Cooperation Fund (EDCF), the Abu Dhabi Fund for Development (ADFD), the Asian Development Bank (ADB) and the Australia-Pacific Islands Partnership Trust Fund (APIP TF).

It will mark the first GCF-approved private-public partnership (PPP) that a Korean company has secured through an international bid. The GCF, based in Songdo, Incheon, is committed to investing 40 percent of the total project cost.

Under the contract, Hyundai Engineering will be in charge of building the power-generation facilities and once it is done, K-water will manage and operate them through THL for the next 30 years.

The Solomon Islands rely completely on expensive imported diesel to generate electricity, so the price of electricity there is among the highest in the world and vulnerable to fluctuations in fuel prices.

According to K-water, the country's cost of power generation stood at $0.64 per kilowatt hour in 2017 compared to Korea's $0.09 per kilowatt hour. In addition, it was higher than the average for Pacific Island countries, at $0.40 per kilowatt hour.

At the same time, the state lacks power infrastructure, allowing only 10 percent of the 610,000 citizens to use electricity as of 2017.

“The project is significant given that we will build a clean energy facility in a developing country through global cooperation,” K-water CEO Lee Hak-soo said.

“We are set to try our best to show off K-water's management technologies and help a local company to extend its business abroad.”