Korea’s power company looks for business abroad
Komipo’s overseas ventures are unique among electricity generators in Korea. Overseas business now accounts for about 10 percent of Komipo’s profit. Its most successful business has been a coal-fired power plant in Cirebon, a port city 220 kilometers (137 miles) east of the Indonesian capital of Jakarta.
The 660-megawatt plant, Cirebon Electric Power (CEP), started operations in 2012 as a joint venture between four companies: Komipo, Japan’s Marubeni Corporation, Korean coal selling agency Samtan and Indonesia’s PT. Indika Energy.
Bids for the project were accepted by the Indonesian state-owned electricity company Perusahaan Listrick Negara (PT. PLN) in 2006. It was the first time a Korean electricity provider won a bid for an overseas coal-fired power plant.
The plant has earned a good reputation in the Indonesian energy market. CEP was selected as the No. 1 power plant operating under PT. PLN last year after it showed no operational problems since October 2014 and the highest operations rate among Indonesia’s energy generators.
“The Indonesian staff at CEP have pride working here and like to wear uniforms with the company’s logo,” said Lee Inn-hyeok, deputy general manager of CPS.
The plant has earned $46.28 million in accumulated profit through April of this year, and Komipo has recovered 66 percent of its investment in the plant. The company expects to recover its entire investment by next year.
Komipo opened up export opportunities for about 40 Korean companies throughout the construction and management of CEP. Doosan Heavy Industries built the facilities and supplied materials, Kepco Engineering & Construction supervised the plant designs, Samtan supplied fuel and the Export-Import Bank of Korea financed the project.
There are also many local small and midsize companies on long-term business contracts with CEP, such as One Plant Company, which inked a 15-year contract worth 17 billion won ($15 million) for plant maintenance.
“We expect Komipo’s comprehensive power plant export model - from financing and construction to operation of the plant - to offer new overseas business opportunities for small and midsize enterprises in Korea and also encourage other electricity providers to successfully penetrate overseas markets,” said Cho Sung-jun, a senior manager at Komipo.
The company set up a council promoting business overseas consisting of 35 Korean small and midsize enterprises in April 2012. The members have achieved $1.5 million worth of parts exports in 2013, $3.6 million in 2014 and $4.02 million in 2015.
“Unlike Korea, demand for electricity in developing countries is rising, especially in Indonesia, which makes it an attractive export destination for the nation’s energy businesses,” said Cheong Sung-Kyo, president director of Cirebon Power Services.
“The Indonesian government has laid out plans to build plants generating 35 gigawatts of power through 2019, and the electricity market is growing 8.7 percent annually on average.”
The second coal-fired power plant for Cirebon with a capacity of 1,000 megawatts is scheduled to break ground in July, and a memorandum of understanding to build up a third plant in Cirebon was signed on May 16.
Compared to Komipo’s Indonesian business, its Thailand operation is smaller, but a power plant in Navanakorn is expected to serve as a gateway to future overseas businesses.
“Komipo is the first among the nation’s electricity generators to enter Thailand, and Japan’s presence in the country is still much bigger than Korea’s,” said Koh Byung-euk, assistant managing director for Navankorn Electric. “But we think of Thailand’s business as a bridge for Komipo to expand into other Asian countries, considering the location of Thailand.”
BY KIM JEE-HEE [email@example.com]