It has been confirmed that Korea Electric Power Corp. has begun to adjust detailed conditions after ..

Target of Samsung Electronics and SK Hynix
5 years’ worth of KRW 25 trillion in advance payment proposal
Utilization of large-scale power grid construction resources
It is under discussion, but nothing has been confirmed

사진 확대 Participants are having a panel discussion at a public hearing on the “industrial regional electricity rate system” at the South Seoul headquarters of the Korea Electric Power Corporation in Yeongdeungpo-gu, Seoul last month. [Yonhap News]

It has been confirmed that Korea Electric Power Corp. has begun to adjust detailed conditions after proposing to pay 25 trillion won in advance for the next five years to Samsung Electronics and SK Hynix.

According to Yonhap News on the 3rd, KEPCO recently proposed to pay a total of 25 trillion won in advance for electricity bills, including 20 trillion won to Samsung Electronics and 5 trillion won to SK Hynix. This is an astronomical amount equivalent to exactly five years’ worth of electricity bills paid by the two semiconductor companies last year. KEPCO plans to actively use the huge advance payments paid in advance by large companies as a key investment resource for the construction of large-scale power networks such as Yongin Semiconductor Cluster and Honam region.

KEPCO’s “pre-payment of electricity bills” card is due to the difficult financial situation at the edge of the cliff. KEPCO’s total debt amounted to 210 trillion won as of the end of June this year. Interest costs alone are 11.5 billion won per day. To make matters worse, if the government’s temporary special measures, which increased the issuance limit of KEPCO bonds to up to five times the total amount of capital and reserves, end at the end of next year, the issuance limit will be doubled again from 2028, forcing the funding capacity to quickly run out.

사진 확대 Korea Electric Power Corporation (KEPCO) Naju office building

KEPCO is reportedly actively persuading both companies and public companies that the advance payment system for electricity bills can be a “Win-Win” strategy. The logic is that the interests of semiconductor companies, which are in urgent need of rapid expansion of the power grid, and KEPCO, which is in desperate need of stable large-scale investment resources, match exactly.

KEPCO is said to have offered an attractive interest level that exceeds the interest rate on the two-year treasury bond and is strongly considering deducting the interest from the actual electricity bill on a semi-annual basis instead of paying it in cash.

KEPCO is in the process of negotiating by handing over a proposal for advance payment to the end, and no key details such as participation, exact interest rates, size and period of advance payment have been confirmed yet. Some worry that companies that have to give astronomical cash first have a considerable financial burden. Park Jung-eun, a lawmaker of the Democratic Party of Korea, proposed an amendment to the Korea Electric Power Corporation Act, which calls for legally tying up the advance payment for electricity bills secured by KEPCO except for those strictly prescribed by the presidential decree, such as expanding the electricity grid.

An official from KEPCO explained, “This proposal is meant to raise funds for large-scale infrastructure investment in a situation where there is no suitable means of financing other than issuing bonds, and to provide participating companies with stable asset management above the interest rate on treasury bonds.”