Remarks premised on no support from semiconductor special act; prepayment proposal tied to bond ratio reduction

Korea Electric Power Corporation President Kim Dong-chul (second from right) and Korea Hydro & Nuclear Power President Kim Hoe-cheon (far right) attend the national audit of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee on Monday. [Yonhap]
Korea Electric Power Corporation President Kim Dong-chul (second from right) and Korea Hydro & Nuclear Power President Kim Hoe-cheon (far right) attend the national audit of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee on Monday. [Yonhap]

Korea Electric Power Corporation President Kim Dong-chul said Monday that Kepco will cover less than 20 percent of the costs needed to supply power for the first phase of the Honam semiconductor cluster, with Samsung Electronics and SK hynix picking up the remaining 80 percent.

Kim made the remarks during the national audit of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee, responding to a question from People Power Party lawmaker Kim Do-eup about the budget for transmission infrastructure. "The portion Kepco bears is less than 20 percent," he said. "Samsung and SK hynix are set to cover the rest."

Kim said the total cost of first-phase power supply infrastructure amounts to 1.4 trillion won ($1.05 billion). He also confirmed, in response to a question from PPP lawmaker Jo Ji-yeon, that Samsung and SK hynix — as the actual end users — would bear 80 percent of that figure.

However, the semiconductor special act allows the state and local governments to cover between 50 and 100 percent of the costs of building and operating industrial infrastructure needed for the cluster.

Kim said the 80-20 split applies only in the absence of government support. "If support is provided under the semiconductor special act, the arrangement changes accordingly," he said. "Without it, Kepco, Samsung and SK hynix each bear costs in proportion to their share of power use."

Kepco also explained why it had earlier proposed that Samsung and SK hynix prepay 25 trillion won in electricity bills, citing the utility's corporate bond ratio as the reason.

Kim Jae-gun, Kepco's executive vice president for power systems, said the utility's corporate bond ratio currently stands at five times and must be brought down to two times by the end of 2027. "We made the proposal as a way to resolve the problem on our own," he said.

Kim Dong-chul echoed that view, saying keeping the bond issuance multiple within two times is "in fact Kepco's biggest concern."

Kim added that the prepayment plan was designed by Kepco and proposed to Samsung and SK hynix following a policy suggestion and bill introduced by Democratic Party of Korea lawmaker Park Jeong.


oskymoon@heraldcorp.com