Changwon Mayor Hong Nam-pyo: "Liquid Hydrogen Plant Went Wrong from the Start"

Expresses Intention to File Lawsuit for Non-Existence of Debt

"The Changwon Liquefied Hydrogen Plant Project was a business that went wrong from the very beginning."

While Hi Changwon, the operator of the Changwon City Liquefied Hydrogen Plant Project, has fallen into a state of default, Changwon Special City Mayor Hong Nam-pyo made this assessment regarding the situation.

Hong Nampyo, mayor of Changwon Special City in Gyeongnam, is explaining the Changwon liquefied hydrogen plant project. Photo by Lee Seryung

At a press conference on current issues held in the third meeting room of City Hall on the 19th, Mayor Hong stated, "From the time Hi Changwon, the project implementation corporation, was established, subsidies from Changwon City and Gyeongnam Province were injected as capital, and procedures such as a preliminary feasibility study were skipped, so the project was carried out illegally."

He further explained, "The project was designed in a way that required the city's finances to continue being drained, as the condition of Changwon City purchasing 5 tons of liquefied hydrogen per day for decades was used as collateral for project financing (PF) loans."

He also noted that although the liquefied hydrogen plant was completed in January 2023, it is not considered officially completed under the contract, as liquefied hydrogen is not being produced.

Mayor Hong said, "With many procedures skipped, not only Changwon City but also the Changwon Industry Promotion Agency, which is a shareholder, is facing an enormous impact," adding, "If all the legal procedures had been followed, we probably would not have invested."

Hong Nampyo, Mayor of Changwon Special City in Gyeongnam, is answering questions related to the Changwon liquefied hydrogen plant project at a press briefing on current issues. Photo by Lee Seryung

Regarding whether the liquefied hydrogen plant project can be normalized, he said, "So many things are tangled up that normalization is virtually impossible, and since it was done illegally, there is little that can be remedied," adding, "We are gathering wisdom to minimize the city's damage."

He drew a line by saying, "It is a contractual issue between Hi Changwon and Doosan Enerbility," effectively stating that it is unrelated to Changwon City, but also hinted at the intention to file a lawsuit for non-existence of debt to minimize the city's financial losses.

He said, "There is the issue of collateral and of purchase commitments, but if the purchase commitment made with the syndicate is invalidated, the city will no longer be responsible for purchasing 5 tons of liquefied hydrogen per day," adding, "If necessary, we will clarify this through litigation."

Regarding the auditor's comment that "as a joint-stock company under commercial law, Hi Changwon should come up with its own measures and secure investor funding to overcome financial risks as the principle of normalization," he added, "The Industry Promotion Agency should legally find its own solutions, but since there are likely to be limitations in their capabilities, Changwon City will provide assistance."