'Nuclear power plant suspension could bring legal charges’

With Korea Hydro & Nuclear Power’s pending decision to suspend the construction of Shin-Kori No. 5 and 6 nuclear power plants in Ulsan, the plant’s parent company Korea Electric Power Corp. is reviewing whether it could be held legally liable to its shareholders. 

After taking office in May, President Moon Jae-in decided to temporarily suspend the construction of the Shin-Kori plants as part of his administration’s nuclear-free energy policy to reduce the country’s reliance on nuclear energy. The KHNP is scheduled to hold a board meeting Friday to decide whether to cease the construction of its two reactors.

In light of the upcoming decision, the KHNP has conducted a legal review as to whether the company would be fiscally or criminally liable for the fiscal fallouts of the pending shutdown. It submitted the review report to a member of the National Assembly’s Trade, Industry and Energy Committee.

“As long as the directors or third parties are not acquiring profits, the company should not be criminally liable, pardoning no unusual circumstances,” said KHNP in its review regarding the labor union’s claims that the suspension could be translated as negligence. A shareholder representative filing against the KHNP is also low because the KHNP has a single shareholder. The KHNP is a wholly owned subsidiary of Kepco. However, the KHNP did not exclude the possibility that Kepco, as the majority shareholder, could be sued by representatives of its shareholders.

Some industry officials speculate that foreign investors unaware of the new government’s renewable energy policies could sue Kepco to pay damages for the KHNP’s suspension decision.

The Korea Development Bank is the largest shareholder of Kepco with 32.9 percent of shares, while the Korean government owns an 18.2 percent stake. According to Kepco’s Institutional Research data, foreign ownership of the company stood at 30.74 percent by the end of last year.

A shareholder holding a share equal to or more than one-hundredth of the total number of shares issued under the Commercial Act has the right to file a liability complaint.

“Even if Kepco shareholders submit lawsuits against the company for KHNP’s suspensions, it would be difficult to cite the consequential or indirect damages caused to Kepco shareholders,” said KHNP’s law review document.

During a board meeting last week, members of the board asked its builders and their subcontractors to submit documents related to the reactor construction, including the means and cost of compensating lost wages and managing the sites, in an effort to determine all potential fiscal burdens. 

President Moon has declared to pursue clean and renewable energy, but the policy has raised questions regarding potential spikes in the price of electricity as well as power shortages.

By Julie Jackson (juliejackson@heraldcorp.com)