Kepco CEO confident about Saudi nuclear bid

The head of the state-run utility company Kepco said Tuesday that it is making progress in its bid to construct a nuclear power plant in Saudi Arabia, allaying concerns the country is losing competitiveness in the sector amid the current administration’s push to decrease reliance on nuclear energy.

At a press dinner near the Sejong government complex, Kepco CEO Kim Jong-kap expressed confidence in the nuclear project’s bidding process, emphasizing the company’s previous experience working in Saudi Arabia.

“I believe Korea has given a good impression to Saudi Arabia in terms of localization,” said Kim. “We have a lot of cooperative experience […] there has been quite a bit of progress at a working level.”

A shortlist of bidders will be decided by March and a preferred bidder by the end of this year, according to Kim.

He also discussed Kepco’s position on a number of other ongoing or withdrawn projects.

On the Barakah nuclear power plant in the United Arab Emirates (UAE), Kim blamed a two-year delay in its commercial operation on unforeseen factors, such as climate and cooperation with foreign regulators, but said he is satisfied with the current progress.

He also explained the company’s decision to give up on purchasing the nuclear company NuGeneration in Britain last year, saying that there was too much risk without accurately knowing the project’s profitability as the country looks to make changes to its energy policy.

As for Kepco’s overall performance in overseas markets last year, Kim said it will work on improving its position.

“Sales from overseas last year was at 2.7 trillion won ($2.4 billion),” said Kim.

“We need to be more capable in areas, such as engineering and purchasing, for overseas businesses.”

Kim also said Korea’s electricity prices need to increase to reflect real prices.

“Around 4.7 trillion won worth of electricity was sold at less than its production cost last year,” said Kim. “We are having discussions with the government to incorporate a pricing system based on wholesale price by the end of the year.”

Kim also suggested changes to the country’s progressive electric billing system.

The system leads to significantly higher rates for households that use more electricity than those that use less.

The CEO suggested incorporating support fees for lower-income households, pointing out that he himself receives the 4,000 won discount for using less than 200 kilowatt-hour a month.

“If the progressive electricity billing system is reformed, rates for 9.56 million households that pay first stage fees will increase,” said Kim.

The first stage fee is the lowest of the household electricity billing system.

The CEO’s comments come after Kepco posted disappointing results in the third quarter last year, with its net profit plummeting 51.8 percent from the previous year.

“It would be great to be in the black, but fuel prices rose and the operation rate for nuclear power plants was low last year,” explained Kim.

Kim added that its cost-cutting initiatives last year will continue this year.

“If 11 of our companies continue emergency management measures, we expect them to fare better this year.”

BY CHAE YUN-HWAN [chae.yunhwan@joongang.co.kr]