The Government of Korea has embarked on an ambitious plan to restructure andrnprivatize the country’s electric power industry. The government’s three phasernrestructuring plan is progressing, despite opposition from the labor unions.rnAmong the major milestones is the sale of five sizeable power stations, eachrnvalued between US$2.5 to US$4 billion. There is considerable interest amongstrnthe international as well as domestic investors in these assets.rnIn late July, the Korea Electric Power Company (KEPCO) announced that thernprivatization process would proceed with the sale of Korea South East Powerrn(KOSEP) in early 2003. This is to be followed by other generating assets to bernauctioned by 2005.rnDomestic investors may include conglomerates like LG, SK, POSCO, andrnHanwha Group; international investors may include Singapore PowerrnInternational, Tractabel, or possibly CLP. American companies are notrnexpected to be active given their current financial difficulties.rnThe opportunities in acquiring the Korean assets are enticing. These, however,rnmust be weighed against considerable risks, including uncertainties about:rn1. Fluctuations in fuel prices;rn2. Treatment of transmission congestion pricing within the Koreanrnmarket;rn3. Bidding strategies of competing generators;rn4. Market clearing prices, both in the short and longer-term; andrn5. Regulatory, political, and financial uncertainties.rnThis paper presents:rn6. Fundamentals of the Korean electricity market;rn7. An overview of the government’s market liberalization plan, includingrna review of the market rules, market structure, bidding strategies, andrnmajor players;rn8. Modeling methodology and input assumptions used for the study;rn9. Results of market simulation including projections of market clearingrnprices for five different regions for the period 2002-2015;rn10. Discussion of profitability of investing in Korean generation assetsrnabout to be liberalized; andrn11. Discussion of considerable risks and uncertainties that may affect thernvalue and profitability of investments.
展开▼