People Power Party Changwon City Council Members Demand Disclosure of Liquefied Hydrogen Plant Audit Results

The People Power Party delegation of the Changwon Special City Council in Gyeongnam has called for the announcement of Changwon City's audit results regarding the liquefied hydrogen plant project.

On the 19th, the council members held a press conference at the city hall press center, demanding, "The Changwon City administration must specifically disclose what kind of audit was conducted on the liquefied hydrogen project."

The People Power Party delegation of Changwon Special City Council in Gyeongnam is holding a press conference urging the announcement of the audit results by Changwon City regarding the liquefied hydrogen plant project. Photo by Lee Seryung

They stated, "The administrative investigation special committee has already made clear the rights and wrongs of the liquefied hydrogen project, yet the city administration has not even released a report on the special audit disposition for several months."

They further insisted, "If an audit was conducted, the results should be disclosed in detail so that citizens can easily understand them. If not, the reasons must be clearly explained. If the audit was suspended, the reasons and those responsible must be made public."

The council members argued, "Even now, a dedicated team should be formed to conduct a special audit and thoroughly determine why taxpayers' money is being wasted."

They also emphasized, "The reasons for the construction delay must be clearly explained to the citizens, and the wrongful practice of shifting responsibility to the Changwon Industry Promotion Agency must end."

Additionally, they added, "The lenders must follow the contract instructions and then begin the process of recovering the loans."

In response, a Changwon City official said, "A special audit has been underway since April, and because the project is large in scale, it requires more careful review and there must be no errors in the results. Therefore, we cannot confirm when the audit will be completed."

The first domestic hydrogen liquefaction plant was completed at Doosan Enerbility's Changwon Factory in Gyeongnam. Photo by Gyeongnam Provincial Government

The Changwon liquefied hydrogen plant project is the first nationwide initiative for the production and supply of liquefied hydrogen, launched in 2019. Hi Changwon, a special purpose company jointly established in April 2020 by the Changwon Industry Promotion Agency, Doosan Enerbility, and Korea Industrial Complex Corporation, has been responsible for operating the facility.

Hi Changwon financed 71 billion won out of the total project cost of 105 billion won through project financing (PF), and in July 2021 began construction of a facility at Doosan Enerbility's Changwon factory capable of producing 5 tons of liquefied hydrogen per day, which was completed in August 2023.

Initially, the plant was planned to produce 5 tons per day, up to 1,825 tons annually, supplying liquefied hydrogen to nearby research institutions, companies, and hydrogen charging stations. However, due to sluggish demand and decreased operating rates, operations were suspended but commercial operations began at the end of June this year.

During this process, Hi Changwon declared default, and the lender group, which had loaned 71 billion won to Hi Changwon, took over the corporation and facility. Subsequently, they billed the Promotion Agency 330 million won for 20 tons of liquefied hydrogen produced from June 27 to 30, 2024.

They also demanded that the payment for the 155 tons produced in July, amounting to 2.6 billion won, be made in two installments.

Previously, the Changwon Industry Promotion Agency had pledged to purchase 5 tons of liquefied hydrogen per day. The price, excluding VAT, was set at 15,300 won per kilogram, totaling 76.5 million won per day and approximately 28 billion won annually.

Having failed to secure buyers, the Promotion Agency, which had delayed transactions, is now required to pay the lender group 84 million won per day, or about 30 billion won annually. The total project period for the plant is until 2054.

The Promotion Agency has missed the deadline for the first payment for liquefied hydrogen purchases and is currently negotiating with the lender group on ways to normalize the project.