Keys to winning nuclear bids

Exactly one year ago, the government was in jubilation after winning a bid for the construction of a $40 billion nuclear power plant in the United Arab Emirates. The government declared that further successes in the industry were around the corner, which would be a major growth engine for Korea in the 21st century.

Its euphoria was understandable. The feat reversed Korea’s repeated failures in accessing overseas nuclear-power-plant markets since 2004.

After the success, the government set an ambitious goal of winning bids to build two nuclear power plants each year. It would transform the business into a major driving force for the economy. One year later, however, no more good news is on the horizon.

Nuclear plant construction in Jordan, which South Korea viewed as a done deal, eventually went to a consortium of French and Japanese companies. Another nuclear plant project in Turkey is also likely to go to Japan, even though the government argues Korea still has a chance.

It is time for the government to step back and thoroughly review what went wrong. The government argues that the failures resulted from our inability to secure financing. The argument appears to make sense. For example, South Korea and Turkey were to build the plant by borrowing money in international financial markets and paying back the debt by selling electricity produced by the plant.

If we could finance our share of the construction cost - 14 billion won ($12.1 million) amounting to 70 percent of the total - on cheap interest rates, we might have succeeded in winning the bid. While we wavered, Japan signed an MOU with Turkey.

This problem will continue to hamper our efforts down the road. In fact, many countries wishing to have nuclear power plants are emerging economies. Because they lack financial resources, the government and businesses should figure out ways to solve such vulnerability facing our financial capability when it comes to wining bids for nuclear projects.

The government and private sector’s resources should be pooled in such circumstances. Currently, however, the Korea Electric Power Corporation is the only entity involved in the bidding process. Moreover, winning bids for the construction of nuclear power plants is far from KEPCO’s only job.

Establishing a separate arm under the corporation to bid exclusively for the construction of nuclear plants could be somewhere to start.