South Korea’s state utility firm Korea Electric Power Corp. (Kepco) may have to return its loans to state lender as its oversea coal investment commitment is expected to fall through due to a new law banning public investment in coal-related projects.
According to sources on Monday, the bill led by ruling party lawmaker Woo Won-shik aims to revise the Export-Import Bank of Korea Act to prevent the state lender from financing coal-fired power plant projects overseas.
The legislation is also intended to implement the Paris Convention to reduce carbon dioxide emissions and prevent financially risky coal investments. The bill was tabled to the strategy and finance committee of the National Assembly on Sept. 21 and is pending the subcommittee’s review.
If passed, the new act would force Kepco to withdraw from its overseas projects and immediately return its financing from Exim bank.
Kepco obtained loan approval for 625.2 billion won ($543.8 million) from the Exim Bank and has so far expedited 223.3 billion won to finance Vietnam`s 1.2 gigawatt Nghi Son 2 coal-fired power station. The project was determined in 2013. Construction started in 2018 and is scheduled to be completed in July 2022.
When the bill is approved, Kepco will be prohibited from withdrawing additional loans related to the project and must have to repay outstanding balance immediately. Opposition party lawmakers say the bill should not be applied retroactively to cause damage to Kepco’s business operation.
By Oh Chan-jong and Minu Kim
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