[Exclusive] KEPCO Engineering & Construction Withdraws from Canada Branch... Impact of North American Nuclear Power Project Reduction

KEPCO E&C Withdraws from Canadian Business, Closes Local Branch
Deteriorating Local Business Viability and KEPCO's 'Snowballing Deficit' Impact
Overseas Business Reduction Inevitable, Concerns Over Negative Effects on K-Nuclear Power
Growing Need for North American Base, Considering Establishment of US Branch

KEPCO Reports Q1 Operating Loss of 7.8 Trillion Won, Record High... "Impact of High Oil Prices and Frozen Electricity Rates"
(Seoul=Yonhap News) Reporter Ryu Hyorim = Korea Electric Power Corporation (KEPCO) announced on May 13 that its consolidated operating loss for the first quarter of this year was 7.7869 trillion won, marking a turnaround from an operating profit of 565.6 billion won in the same period last year. Sales increased by 9.1% year-on-year to 16.4641 trillion won. Net loss also turned to 5.9259 trillion won. The photo shows the KEPCO Seoul Headquarters in Jung-gu, Seoul. 2022.5.13
Photo by ryousanta@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Junhyung] Korea Electric Power Technology (KEPCO E&C) is completely withdrawing from its Canadian operations. This comes just two years after establishing its Canadian branch in 2020 with the goal of expanding its nuclear power business in North America. Concerns are emerging that KEPCO E&C’s reduction in overseas operations could lead to a weakening of the competitiveness of the Korean-designed nuclear reactor (APR-1400).

According to comprehensive reporting on the 27th, KEPCO E&C has recently entered the final stages of procedures to close its Canadian branch. Earlier, KEPCO E&C decided to withdraw from the Canadian market last month and began the process of shutting down the local office. The company plans to complete the necessary administrative procedures for withdrawal, including deregistration with the Canadian government, by next month. A KEPCO E&C official stated, “The installation period for the (Canadian branch) ended last month,” adding, “Most of the tasks required for withdrawal, such as terminating local lease contracts, have been handled.”

The reason for KEPCO E&C’s closure of its Canadian branch is the deterioration of local business viability. To actively enter the Canadian nuclear power market, KEPCO E&C established a liaison office locally in 2019 and then set up a branch in August of the following year. Initially, KEPCO E&C planned to use the Canadian branch as a base to secure orders for local nuclear power facility improvement projects. However, starting with the COVID-19 pandemic, as major countries implemented supply chain policies centered on domestic companies, the performance of KEPCO E&C’s Canadian branch fell short of expectations.

The “snowballing deficit” of its parent company, Korea Electric Power Corporation (KEPCO), is also related to the withdrawal from Canada. KEPCO posted a deficit of 7.8 trillion won in the first quarter alone. Industry insiders expect KEPCO’s deficit for the first half of this year to exceed 13 trillion won. In response, KEPCO formulated high-intensity self-rescue measures in May and began efforts to improve its financial structure. As part of these measures, KEPCO plans to proceed with the sale of its shares in KEPCO E&C starting in September.

Along with the closure of the Canadian branch, a reduction in KEPCO E&C’s overseas operations appears inevitable. With the Canadian branch?the company’s only North American base?closing, accelerating local business will inevitably become difficult. Since KEPCO E&C holds the core design technology for the Korean-designed APR-1400 nuclear reactor, there is also a possibility that the overseas operations of domestic nuclear companies such as Korea Hydro & Nuclear Power could be adversely affected.

There is also a viewpoint that KEPCO E&C’s withdrawal from Canada may cause more harm than good. Given the increased opportunities to target the North American nuclear market through the Korea-US nuclear alliance, eliminating a local base could weaken competitiveness in overseas business.

In response, KEPCO E&C is considering establishing a new North American base in the United States. Since the US is actively pursuing policies to expand nuclear power, the company believes it needs to reorganize its North American nuclear market strategy centered on the US. Earlier this year, the US announced plans to invest $6 billion (approximately 7.9 trillion won) to continue operating aging nuclear power plants.