The government told the National Assembly it plans to invest $23.2 billion in the Encinal gas-fired combined-cycle power project in Texas, the first project under its U.S. investment program, and expects to recover up to $45 billion over 20 years. The government said the project has commercial merit, but the People Power Party said the national interest must be examined closely in negotiations with Washington.
The National Assembly's Trade, Industry, Energy, SMEs and Startups Committee and Finance and Economy Committee received a closed-door briefing from the government on the 22nd on U.S. investment under the special act on the operation and management of strategic investment between South Korea and the United States.
Koo Ja-keun of the People Power Party told reporters after the briefing that "the government reported it will invest $23.2 billion in the Texas gas-fired combined-cycle power plant project and can recover $43 billion to $45 billion over 20 years, and judged that the project has commercial merit."
"Since it is still at the development stage, there are concerns about whether other variables could emerge in the process, so we said caution is needed," he added. Kim Sung-won, the chairman of the industry committee and a member of the same party, said, "The government says commercial merit has been secured, but we urged it to negotiate in a way that better serves the national interest in future talks with the United States."
Lawmakers called for further verification of the Texas project, saying it is unclear whether long-term buyers for the electricity have been secured. The government explained the project's commercial merit by saying it can recover $45 billion over 20 years, but lawmakers said the grounds supporting long-term profitability, including actual power buyers, need to be examined closely.
Rep. Bae Joon-hyung of the People Power Party, the opposition liaison on the finance and economy committee, said, "Someone has to buy the electricity, so we pressed on who will buy it, who will build the data centers and whether they have sufficient capacity, and whether they have experience building data centers before." He added, "We raised the issue that these points are not clear."
The government is reviewing the construction of eight large nuclear reactors in the United States as its second U.S. investment project and the development of liquefied natural gas in Alaska as its third. Unlike the first project, however, the other two are to be pursued reflecting the interests of both countries, and their feasibility is expected to be reviewed after further consultations with the U.S. side.
The Ministry of Trade, Industry and Energy also reported that it is discussing with the U.S. side a plan to acquire a stake in the U.S. nuclear company Westinghouse (WEC) in connection with the project to build eight new reactors in the United States, according to sources. The size of the equity investment is currently under negotiation in the range of 5% to 10%.
The WEC stake purchase is tied to how Korean companies will take part in nuclear construction projects in the United States. The government is expected to discuss with the U.S. side the specific structure of the reactor construction business and the scope of Korean companies' participation.
On the size of the investment in the United States, the government also reaffirmed the existing agreement that no additional investment will be made if the ceiling of $20 billion a year and $200 billion in total is exceeded.
The timing of a memorandum of understanding between Seoul and Washington and its announcement has yet to be set. Kim said, "Under the special act, it is to be decided after negotiations with the United States, so I think preparations are being made," adding, "No date has come out yet."
