Samsung and SK Hynix Decline KEPCO's Proposal to Prepay W25 Tril. in Electricity Bills

Samsung Electronics and SK Hynix have reportedly rejected Korea Electric Power Corp.'s (KEPCO) proposal to prepay five years' worth of electricity bills totaling 25 trillion won.

According to the industry today, Samsung Electronics and SK Hynix concluded after internal reviews that accepting the proposal would be difficult and conveyed this decision to KEPCO.

This is interpreted as meaning that while the semiconductor industry has experienced a historic boom since the second half of last year, it is burdensome to prepay costs assuming that such performance will continuously last for five years.

This is because paying massive electricity bills all at once could act as a burden on mid-to-long-term management strategies.

There had been analyses that prepaying electricity bills could help build power infrastructure for the semiconductor clusters in Yongin and Honam, but the companies appear to have chosen to minimize management uncertainties for now.

Recently, KEPCO proposed that Samsung Electronics and SK Hynix prepay electricity bills amounting to 20 trillion won and 5 trillion won, respectively.

This level corresponds to five years' worth based on the electricity bills paid by both companies last year.

KEPCO explained that the electricity fees received in advance would be preferentially invested in supplying national critical power grids.

It is also known that KEPCO proposed applying an interest rate higher than the yield on two-year Treasury bonds to the prepaid fees, while deducting electricity bills on a semi-annual basis.

For KEPCO, there were expectations that this would help ease the burden of issuing new corporate bonds while securing financial resources for power grid investments.

As of the end of June, KEPCO's total liabilities stood at 210.7 trillion won, with daily interest payments reaching 11.5 billion won.

In addition, the government special exemption that increased the corporate bond issuance limit—previously capped at twice the sum of capital and reserves—to up to five times is also nearing its expiration at the end of next year.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.