Tongyeong Ecopower Corp. Selects Hanwha E&C as EPC Constructor of Tongyeong LNG Combined Cycle Power Plant EPC Constructor - Kick-starting the Energy Business

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- HDC Group creates sustainable business platform through full-fledged energy business and connected business expansion

- Tongyeong Ecopower Corp. secures business value, economic feasibility and profitability with its seaside location and direct fuel import as its forte

On November 30^th, Tongyeong Ecopower Corp. of the HDC Group signed an approx. 800-billion-won contract with Hanwha E&C, who has been selected as the EPC (Engineering Procurement Construction) constructor of the Tongyeong LNG Combined Cycle Power Plant.

The Tongyeong LNG Power Plant project is a private power plant construction project where one LNG combined cycle power generation unit with an installed capacity of 1,012㎿ and one 200,000㎘-sized storage tank unit will be constructed and operated on a 275,269㎡ site within Sungdong Shipbuilding located in Gwangdo-myeon, Tongyeong in Gyeongsangnam-do Province. Total expenses reach approx. 1.3 trillion won. With the goal of setting a financial covenant and beginning main construction on the plant in 2021, the plant site building work is currently underway.

To secure a competitive edge, HDC chose a strategic location and carried out the project. The Sungdong Shipbuilding site in Tongyeong is at a geographical advantage as it borders on the coastline and is also close to Korea Gas Corporation’s Tongyeong LNG Terminal. It also completed its final land purchase in September 2019. HDC signed an MOU with Korea Gas Corporation in 2015 and has been collaborating with them since. On November 10^th, HDC concluded the “Korea Gas Corporation Manufacturing Facility Access Agreement” for the Tongyeong LNG Power Plant project. With these means, a basis to load and unload directly imported fuel using Korea Gas Corporation’s loading equipment has been arranged, and Korea Gas Corporation’s gas pipeline usage fee can be reduced in the fuel price, which takes up the majority of the generating cost, securing competitiveness in cost efficiency.

In particular, the HDC Group selected Hanwha E&C as the EPC constructor through a public tender to establish a more competitive business structure and develop the Tongyeong LNG Power Plant project as a new business platform, not just a simple plant development and operation project. HDC Hyundai Development Company of the HDC Group did not participate in the EPC bid and is planning to promote the project with Tongyeong Ecopower Corp., collaborating with them in various areas.

To draw out maximum competitive power of this project, Tongyeong Ecopower Corp. assessed not only the EPC construction expenses of each candidate but also investment, detailed conditions of construction, ROE (Return on Equity) and more comprehensively. Through this, they selected two preferred bidders and carried out numerous TCMs (Technical Clarification Meeting) and negotiations of construction details. Ultimately, Hanwha E&C, who not only has excellent construction technology and but also presented the most competitive construction costs and business conditions, was selected as the final EPC constructor of the Tongyeong Natural LNG Combined Cycle Power Plant on November 18^th.

The HDC Group plans to use the Tongyeong LNG Power Plant project as a bridgehead to expand their business platform to connected businesses. In addition to the power plant project, the HDC Group strives to take the leap as a lasting company by establishing a stable profit creating structure based on LNG trading business, LNG storage facility lease business, power plant and storage facility operation and maintenance business, etc. An official from Tongyeong Ecopower Corp. remarked, “Since Tongyeong Ecopower Corp. is the first project for the HDC Group to enter the energy development field, we will contribute to the revitalization of the local economy along with stabilizing Korea’s electric power supply as a project that has been carried out with great care considering multiple angles such as business value, economic feasibility, profitability and expandability.”

Last November, HDC signed the “Tongyeong LNG Power Plant Project Joint Promotion Agreement” with Hanwha Energy stating that HDC will be in charge of the construction and operation of the power plant, while Hanwha Energy will be in charge of supplying natural gas. Currently, they are on the verge of concluding an HOA (Heads of Agreement) regarding direct fuel import with competitive terms.