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By Nam Hyun-woo
Investors in Samsung Construction & Trade (C&T) and Korea Electric Power Corp. (KEPCO) are still unsatisfied with the companies' comments to curb participation in overseas coal-fired power plant projects, saying the comments came right after approving participation in building two coal plants in Vietnam.
Not only environmental NGOs but also many investors have been opposing the two sides' plans to participate in the project, named Vung Ang 2, citing climate change and resultant compliance costs. Although the two Korean companies have changed their position to refrain from joining additional coal plant projects after Vung Ang 2, they said the announcement had come "far too late," given the project's projected environmental impact.
"Samsung is a giant, global independent company and bears full responsibility for its own investment decisions regardless of which other actors are participating in risky energy projects," AkademikerPension (AkaP) CEO Jens Munch Holst told The Korea Times.
"So even though KEPCO is moving ahead, Samsung can and should pull back from Vung Ang 2 as it will tarnish the reputation of the (Samsung) group."
AkaP is a Danish pension fund having $20 billion in assets under management. Of that, $63 million is in Samsung companies as equity investments.
Holst's comment came after Samsung C&T Vice President Oh Se-chul said during a National Assembly audit on Wednesday that Samsung C&T would curb its participation in coal projects but would not exit the Vung Ang 2 project.
Regarding questions by lawmakers on Samsung C&T's participation in the Vung Ang 2 project, Oh said engineering, procurement and construction (EPC) contractors, the governments of Korea and Vietnam and other related parties had "built their trust as they have worked together for a long time," thus Samsung C&T "cannot make decisions on what to do with the project alone."
On Oct. 5, KEPCO's board decided to take part in the Vung Ang 2 project, and Korean companies including Samsung C&T and Doosan Heavy Industries & Construction are to join the project as EPC contractors.
The project is aimed at building two 600-megawatt coal-fired power plants in Vietnam. Following the board decision, KEPCO will take over a 40 percent stake in the $2.2 billion project from China Light & Power and break ground next year.
The decision came amid strong opposition from KEPCO and Samsung C&T shareholders including AkaP, U.K.'s Legal & General Investment Management and Norway's KLP.
As they exercise shareholder influence, such as sending messages or running interviews opposing the Vung Ang 2 project, Oh said during the audit that "Samsung C&T has no other coal projects after VA2," and "the company will refrain from joining additional coal projects."
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| Minister of Trade, Industry and Energy Sung Yun-mo speaks during a National Assembly audit in Seoul, Wednesday. Yonhap |
During the same audit, Korea's energy and trade minister Sung Yun-mo also said in his answer to lawmakers' questions that he confirmed "KEPCO and its subsidiaries have no intention to actively pursue overseas coal power projects, and there are no projects (in the pipeline after Vung Ang 2)."
KEPCO's largest stakeholder is the state-run Korea Development Bank with 32.9 percent, followed by the Korean government with 18.2 percent.
Although Sung did not clarify that this was a sign that the country was completely exiting from coal investments, this was largely interpreted that the Moon Jae-in government will not pursue additional coal projects after Vung Ang 2.
However, investors are seemingly unhappy with the unintentional announcement.
"Samsung Group can publicly follow General Electric's lead and end its involvement in coal projects worldwide, avoiding the risks of divestment and shareholder climate resolutions," Holst said.
General Electric initially planned to supply equipment for Vung Ang 2, but the U.S. giant on Sept. 21 that it intended to exit the new build coal power market, and invest in its core renewable energy and power generation businesses instead.
Kim Joo-jin, managing director of lawyers' NGO Solutions for Our Climate, said the announcement to curb coal projects came too late, given the environmental impact of Vung Ang 2 project.
"President Moon Jae-in's Korean Green New Deal initiative is supposed to reduce 12.3 million tons in greenhouse gas emissions by 2025, while the recently approved Vung Ang 2 coal power project would emit more than 200 million tons in emissions over 30 years," Kim said.
"While we welcome that we are nearing the end of this tunnel, this announcement has come far too late for our climate and the local communities that will have to face the air pollution from these projects. We urge KEPCO to reverse the Vung Ang 2 decision and for Samsung C&T to exit from this project."
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