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|Despite widespread concerns, Kepco will move ahead with Vung Ang 2 coal power plant in Vietnam|
The state-run power company said its board members agreed to participate in the $2.2 billion Vung Ang 2 project to build two 600MW coal-fired power plants in Ha Tinh province, Vietnam. With the approval from the board, the project is expected to start in the first half of 2021.
The $2.2 billion power plant project was originally conducted by Mitsubishi Corporation and Hong Kong's China Light & Power (CLP), each holding a 40 per cent stake in the project with Japan's Chugoku Electric Power Co. holding the remaining 20 per cent stake. However, after CLP announced it would withdraw from the project due to its newly-adopted coal exit policy, Mitsubishi proposed KEPCO acquired CLP's stake.
After obtaining approval from its board members, KEPCO will acquire the 40 per cent stake from CLP. If KEPCO's participation is finalised, Korean companies such as Samsung C&T and Doosan Heavy Industries are expected to join the project as engineering, procurement and construction (EPC) contractors.
According to Korea Times, KEPCO is facing growing opposition from investors who are concerned that the project will cause the power company to fail to meet its environmental, social, and corporate governance (ESG) standards and changing global energy standards, which put more importance on renewable energy.
The Korea Development Institute's pre-feasibility study, revealed by Kim Sung-whan of the Democratic Party of Korea (DPK) in June, estimated the net present value of the Vung Ang 2 project at minus $158 million. This means outgoing cash is expected be greater than incoming cash during the project period of 2020-2048.
In spite of such criticism, KEPCO said joining the construction project will help the company and other participating Korean firms create a stable profit structure as KEPCO will operate the plant for 25 years.