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| KEPCO headquarters in Naju, South Jeolla Province / Captured from KEPCO blog |
By Baek Byung-yeul
Korea Electric Power Corporation (KEPCO) has decided to take part in a coal-fired power plant construction project in Vietnam despite growing criticism from global investors and overseas environmental groups, the state-run corporation said Monday.
The state-run power company said its board members agreed to participate in the $2.2 billion Vung Ang 2 project to build two 600-megawatt coal-fired power plants in Ha Tinh Province, Vietnam.
"During a board meeting held Monday, board members approved the company's plan to join a coal-fired power plant construction project in Vietnam," a KEPCO official said. With the approval from the board, the project is expected to start in the first half of 2021.
The $2.2 billion power plant project was originally conducted by Mitsubishi Corporation and Hong Kong's China Light & Power (CLP), each holding a 40 percent stake in the project with Japan's Chugoku Electric Power Co. holding the remaining 20 percent stake. But after CLP announced it would withdraw from the project due to its newly adopted coal exit policy, Mitsubishi proposed KEPCO acquire CLP's stake.
After obtaining approval from its board members, KEPCO will acquire the 40 percent stake from CLP. If KEPCO's participation is finalized, Korean companies such as Samsung C&T and Doosan Heavy Industries are expected to join the project as engineering, procurement and construction (EPC) contractors.
KEPCO is facing growing opposition from investors who are concerned that the project will cause the power company to fail to meet its environmental, social and corporate governance (ESG) standards and changing global energy standards, which put more importance on renewable energy.
The KEPCO board members were anticipated to discuss the Vietnamese coal power plant project at the board meeting held on Sept. 28, but the subject was not on the agenda.
The company has also faced significant opposition from environmental activists who are calling for the company to withdraw its plan because coal-fired power plants release a tremendous volume of greenhouse gases and air pollutants.
KEPCO's global investors have also opposed the power company's move to invest in overseas coal-fired power plant projects, raising ESG concerns and profitability questions. Global asset manager Blackrock demanded KEPCO reveal its strategic reasons for pushing to go ahead with the overseas investment projects.
According to the Korea Development Institute's pre-feasibility study, revealed by Rep. Kim Sung-whan of the Democratic Party of Korea (DPK) in June, the net present value of the Vung Ang 2 project, was estimated at minus $158 million. This means outgoing cash is expected be greater than incoming cash during the project period of 2020 to 2048.
Despite such criticism, KEPCO said joining the construction project will help the company and other participating Korean firms create a stable profit structure as KEPCO will operate the plant for 25 years.
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