Monday, June 2nd, 2014
SEOUL, KOREA - Bidders for Tongyang Power, the operating company of a proposed thermal power plant in Samcheok, Gangwon Province, are busy forming consortiums as a way to strengthen their bargaining power. Following the declaration by SK Group that it would join forces with Daewoo Engineering & Construction, Samtan announced its intention to work with another suitor Daelim Industrial.
SK Gas said that it would tender jointly with Daewoo E&C in the main bidding to be scheduled on June 2. Daewoo E&C is the only domestic contractor with experience in all types of power plants from nuclear to thermal, hydroelectric, and tidal power. It also has had four large-scale power plant projects in excess of US$1 billion.
Instead of bidding for the deal, Daelim Industrial has decided to give full support to Samtan. Samtan needed the know-how of Daelim in EPC (engineering, procurement, and construction) projects while Daelim was in need of financial support of Samtan as the coal mining company is sitting on cash reserves of more than 1 trillion won.
Meanwhile, Doosan Heavy Industries and POSCO Energy are likely to go on their own. Doosan is considered a strong contender as it has had ample experience in power plant asset acquisition. POSCO Energy has joined the fray as a backup plan in case it is unable to land the deal to acquire Dongbu Power's Dangjin plant and Dongbu Steel's Incheon plant. Currently Tongyang Power is owned by Tongyang Cement (55%), Tongyang Leisure (25%), and Tongyang Corp. (20%).