Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Kepco reports significant losses in overseas nuclear projects – Full Analysis.
Units 3 and 4 of the Saeul nuclear reactors are under construction in Seosaeng-myeon, Ulju County, Ulsan, on Jan. 26. [NEWS1]
Korea’s overseas nuclear power projects are posting losses, undermining market expectations that reactor exports would deliver strong returns, according to regulatory filings by Korea Electric Power Corporation (Kepco).
Kepco reported losses of 1.51 trillion won ($1 billion) from construction contracts, including overseas nuclear projects, as of the end of last year in a business filing disclosed on March 10.
The figures cover all construction contracts carried out by Kepco and its subsidiaries, including Korea Hydro & Nuclear Power (KHNP), both at home and abroad. Most of the losses came from overseas nuclear power plant construction projects.
Provisions set aside by KHNP for expected construction losses weighed on profitability. The report showed provisions totaling 1.43 trillion won, signaling that total project costs will likely exceed contract values.
About 1 trillion won of the losses came from the El Dabaa nuclear power plant project in Egypt, which KHNP won in 2022. The project requires equipment tailored to Russian-designed VVER reactors, while higher raw material costs and logistics disruptions following the war in Ukraine pushed up construction expenses.
The Barakah nuclear power plant project in the United Arab Emirates has also swung to a loss. Kepco reported a cumulative loss of 135.1 billion won in construction contracts on a stand-alone basis last year, with the Barakah project accounting for most of the total. The construction contracts segment had recorded annual profits through 2024 but posted a loss for the first time at the end of last year.
KHNP has asked Kepco to settle an additional $1 billion in costs tied to construction delays. Kepco has reflected about 10 percent of the amount as losses in its financial statements.
“The Barakah nuclear power plant is expected to generate dividend income over its 60-year operating period,” a Kepco representative said, adding that it has also “helped expand state-level cooperation with the UAE in areas such as defense and the arms industry.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY AHN HYO-SEONG [[email protected]]