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Korea Herald
17 hours ago
- Business
- Korea Herald
Westinghouse deal tensions loom over Korea-US summit
Controversial KHNP agreement faces backlash at home as leaders prepare to discuss nuclear energy cooperation Escalating tensions over a deal between South Korea's state-run energy firms and US company Westinghouse are complicating the agenda for the upcoming Korea-US summit, where nuclear energy cooperation is expected to take center stage. South Korean President Lee Jae Myung and US President Donald Trump are scheduled to meet in Washington next Monday for their summit, with officials saying nuclear partnership will be high on the agenda. According to a local media report on Wednesday, state-run Korea Hydro & Nuclear Power and Westinghouse, the two companies at the heart of the controversy, are preparing to form a joint venture to enter the US nuclear reactor market on the occasion of the upcoming summit. The report explained that since KHNP cannot independently access the US market, it plans to enter through a partnership with the American firm while handling most of the construction work. Nuclear energy's inclusion on the summit agenda was widely expected, given that the sector was part of South Korea's $200 billion investment pledge in the US under the tariff deal announced last month. President Trump has vowed to expand US nuclear energy capacity from 97 gigawatts to 400 gigawatts by 2050. Achieving this target would require constructing approximately 300 new 1,000-megawatt reactors. Industry observers view the US as eyeing Korean companies' technological expertise and construction capabilities to meet this goal. The plan comes amid controversy over a separate agreement that KHNP and Korea Electric Power Corp. struck with Westinghouse in January, sparking worries about potential summit implications. The settlement resolved Westinghouse's claims that KHNP had violated its intellectual property rights by using licensed Westinghouse technology in the development of its APR 1000 and 1400 nuclear reactor designs. The deal cleared the way for a KHNP-led consortium to sign an estimated 26 trillion won ($18.58 billion) contract in June to build two nuclear reactors in the Czech Republic. But after details of the settlement came to light on Monday following another local media report, the state-run company came under fire for agreeing to lopsided conditions to reach a swift deal, while burdening itself with hefty financial commitments. According to the agreement, KHNP agreed to sign contracts for goods and services worth $650 million with Westinghouse for each export of a single nuclear reactor, and to pay an additional $175 million per reactor in technology licensing fees. The 50-year deal also contains a provision requiring Westinghouse to verify the technical independence of Korean companies before they can bid on overseas nuclear reactor projects, including small modular reactors. It also restricted KHNP to pursuing nuclear projects in only 12 designated countries -- including the Philippines, Vietnam, Kazakhstan, Morocco, Egypt, Brazil, Argentina, Jordan, Turkey, UAE, Saudi Arabia and South Africa -- while barring it from new deals in North America, Britain, Japan, Ukraine and the EU, except for the Czech Republic. Lawmakers blamed KHNP for bowing to US pressure to secure the Czech deal. 'It has been confirmed that the Yoon Suk Yeol government signed an unfair contract with Westinghouse to break the deadlock in the Czech project,' said Rep. Han Jeong-ae of the ruling Democratic Party of Korea at the National Assembly on Tuesday. Amid the controversy, KHNP CEO Whang Joo-ho on Tuesday said the deal terms remain within acceptable limits, but he declined to provide detailed answers, citing confidentiality obligations. 'While I cannot say (Westinghouse's demands) are justified, they are something tolerable enough for us to endure and still generate profit,' Whang said at the National Assembly. Meanwhile, opposition People Power Party lawmakers also stressed that just before the Korea-US summit, it may not serve the national interest for the parliament to directly confront the Westinghouse issue. 'Westinghouse may hold the original technology, but it lacks the construction capacity to independently build reactors, which means Korean companies are likely to handle the construction,' said an industry insider on condition of anonymity. 'Even if the deal is viewed as unfavorable, I believe it was inevitable if Korean companies are going to expand their overseas nuclear businesses.' Amid growing backlash, South Korea's presidential office has ordered the Industry Ministry to investigate the deal to verify that the negotiations and contract process were carried out based on laws and regulations and in accordance with principles and procedures.
Korea Herald
a day ago
- Business
- Korea Herald
KHNP denied access to power plant projects in N. America, Europe under Westinghouse deal: sources
The state-run Korea Hydro & Nuclear Power (KHNP) has been prohibited from bidding for new power plant projects in North America and the European Union (EU), excluding the Czech Republic, and other countries under its agreement with US energy firm Westinghouse over an intellectual property (IP) dispute, industry sources said Tuesday. Under the agreement signed in January, the KHNP is only allowed to sign fresh deals in the Philippines, Vietnam, Kazakhstan, Morocco, Egypt, Brazil, Argentina, Jordan, Turkey, the United Arab Emirates, Saudi Arabia and South Africa, according to the sources. But the Korean company is banned from bidding for new nuclear power plant deals in North America and Britain, Japan, Ukraine and EU nations, except for the Czech Republic. The KHNP and Westinghouse signed the settlement deal in January this year after the latter accused the Korean firm of infringing on its IP, claiming the KHNP's APR 1000 and APR1400 plant designs utilize its licensed technology. The deal removed a major hurdle for the KHNP-led Korean consortium to sign a final contract in June, with an estimated value of 26 trillion won, to build two nuclear power units in the Czech Republic. The Czech deal, which marked South Korea's first overseas nuclear power plant contract since 2009, was initially expected to open new doors for Korean firms seeking business opportunities in Europe. Earlier in the day, KHNP President Whang Joo-ho confirmed his company has closed operations in Poland amid speculations that its deal with Westinghouse influenced the decision. Poland is the fourth European country where the KHNP confirmed its business closure, following Sweden, Slovenia and the Netherlands. "After the new Polish administration took office ... the country decided to drop the state-owned enterprise projects (in the nuclear power sector) ... and that is why we withdrew our business there," Whang said during a meeting with the parliamentary industry committee. It also reportedly includes a condition requiring Korean companies to pass the latter's technology independence verification when independently developing and exporting next-generation nuclear reactors. The 50-year deal is also said to include provisions requiring the KHNP to sign a goods and services purchase contract worth about $650 million with Westinghouse per export of a single nuclear reactor, and to pay $175 million per reactor in technology licensing fees. Asked whether the KHNP believes the deal with Westinghouse was fair, Whang said, "As the party accepting the terms, I cannot say it was fair," but added, "I believe it is something we can endure and still make a profit from." Whang refused to confirm the details of the deal, citing a nondisclosure agreement. Earlier in the day, the presidential office said it has ordered the Ministry of Trade, Industry and Energy to review whether the deal was signed under due process. (Yonhap)
