PowerGen invests in South Korea
International power company and UK generator, PowerGen, has acquired a 49.9 per cent stake in South Korean independent power company, LG Energy Co. for an equity investment of £38m ($61m).
LG Energy is owned by four companies of the LG Group – the fourth largest conglomerate in South Korea. LG Energy is developing a 528 MW gas fired combined cycle plant 120 km from Seoul for a total cost of £209m ($335m). When it comes into operation in 2000, it will be the first of South Korea`s four IPP projects to begin generating.
The total project cost will be financed through equity (31 per cent) and third party debt (69 per cent). PowerGen will guarantee some £91m ($146m) of this debt for an interim period while commercial negotiations are concluded and the project finance agreed. It expected that commercial negotiation will be complete within the next 12 months.
Significant growth is expected in South Korea over the next decade. A further 5.5 GW of IPP capacity is forecast for development and commissioning by 2010 with the next round of IPP bidding due next year.