Troubled inter-Korean ties likely to hit S. Korean state firms

SEOUL, May 19 (Yonhap) -- Two South Korean state firms may suffer huge losses
from their businesses in North Korea due to cooling inter-Korean relations,
government and company officials said Tuesday.
North Korea announced Friday it has scrapped all contracts with South Korea
regarding a joint industrial complex in Kaesong, just north of the heavily
fortified border, putting inter-Korean business projects in the North in
jeopardy.
Following the North's announcement, officials said Korea Electric Power Corp.
(KEPCO) is in danger of idling a 100,000-kw substation built in 2007 to provide
power to the complex.
KEPCO, South Korea's state power company, spent 35 billion won (US$28 million) on
the construction of the substation.
The company has also been paying fees for two unfinished light water nuclear
reactors worth $830 million since their construction was suspended in North Korea
in 2006.
The company paid 11.4 billion won in fees in 2007, and expects to pay 50 billion
won until 2010.
"In case the six-way talks resume, we plan to store the reactors and turbines
until the end of this year and sell the other facilities," said a KEPCO official
who asked not to be named.
The six-way talks aimed at denuclearizing North Korea have been frozen since
December of last year.
Another state-owned firm, Korea Resources Corp. (KRC), has idled operations in
North Korea since the end of 2007. The company had developed a graphite mine in
the southwestern part of the isolated state, but has not been able to bring the
material into South Korea.
"Now it is very hard to resume our business in North Korea due to cooled
inter-Korean relations," a KRC official said.
ksnam@yna.co.kr
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