Wed, 24 Dec 2003

SK, BP to build power plant in S.Korea

South Korea's largest oil refiner SK Corp. said Tuesday it has signed a final agreement with U.K.-based BP Plc. to jointly invest in what would be the country's first private power plant.

According to the agreement, the British power company will buy new shares issued by unlisted SK Power Co., a wholly owned unit of SK Corp., for an equity equivalent to 35 percent, said SK in a disclosure statement

SK Corp. will maintain a 65 percent stake in its power unit established to build and operate a power plant run by liquefied natural gas.

The plant, which is slated to start production from the southern coastal area of Gwangyang 2006, would be the first power plant built and run by a private company.

The country's power plants are currently all owned by state- run Korea Electric Power Corp.

SK Corp. said it will raise loans for 60 percent of the 684 billion won (US$571 million) needed to build the plant, while the other 40 percent will be provided by the company and BP according to their stake ratio.

Deutsche Bank AG advised SK Corp. for the deal with BP.

The power plant will initially generate 1,074 megawatt electricity, and LNG fuel to run the plant will be provided by Tangguh LNG of Indonesia, it added. Dow Jones