The plan proposed by Korea Electric Power Corporation (KEPCO) for Samsung Electronics and SK Hynix to prepay 25 trillion won for five years of electricity bills has ultimately fallen through.
Both Samsung Electronics and SK Hynix decided not to accept the prepayment proposal and recently conveyed their refusal to KEPCO.
Previously in July, KEPCO delivered prepayment proposals to the two companies with the aim of securing financial resources to construct national backbone grids for the swift supply of electricity to high-tech industrial complexes, such as the semiconductor clusters in Yongin and Honam regions.
Facing limitations in self-financing due to massive debts exceeding 210 trillion won and heavy interest burdens, the initiative was intended to reduce the burden of issuing KEPCO bonds and mutually complement the companies' demands for timely expansion of power grids.
Specifically, the discussed plan involved paying annual electricity bills based on recent figures in installments over the course of a year—approximately 20 trillion won for Samsung Electronics and about 5 trillion won for SK Hynix for the next five years—while compensating them with interest rates higher than 2-year government bond yields through electricity bill deductions.
However, Samsung Electronics recently conveyed its official refusal to KEPCO through a vice-presidential level official, and SK Hynix similarly expressed that it would be difficult to participate.
While both companies sympathized with the urgency of supplying power to the semiconductor clusters, they concluded that it was burdensome to disburse massive funds in advance amid an uncertain business environment where they cannot guarantee whether a semiconductor supercycle will continue for the next five years.
Through a written response submitted to the National Assembly, KEPCO confirmed that the two companies notified them of their inability to participate and stated that there are no additional participating companies, effectively causing the plan to secure financial resources through the prepayment system to collapse.
Consequently, KEPCO's task of reducing its debt—which stood at 210 trillion 700 billion won as of the end of June with daily interest costs reaching around 11.5 billion won—is expected to face difficulties once again.
(Reported by Lee Hyeon-yeong | Video by Lee Yu-jin | Graphics by Yook Do-hyun | Produced by SBS Digital News)
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