Negotiations between South Korea and Turkey over the construction of nuclear power plants have come to a halt due to disagreements over the electricity sales price and other issues.
The leaders of the two countries had been expected to reach a deal during last week’s G20 Summit in Seoul, but that did not happen, and while talks are expected to continue, Turkish officials have hinted they also intend to start negotiations with Japan and other countries. The main reason for the breakdown is the wide gap in the price of electricity the proposed nuclear plant will sell.
The project involves the construction of four nuclear reactors in the Sinop region of Turkey’s Black Sea coast at a cost of $20bn through a method known as project financing, with Korea and Turkey jointly footing 30 per cent of the bill and the remaining 70 per cent being raised from bank loans or other sources. After building the power plant, the builder would have to recoup its investments by selling the generated electricity, so a low utility fee could lead to losses and make it difficult to attract other investors.
In the case of a nuclear plant order South Korea clinched from the UAE last year, the Middle Eastern country is footing the entire construction bill. “Turkey wants to hold further negotiations, so we decided to resume talks as soon as possible and reach a conclusion,” said a government official.
The government is still optimistic that Korean companies will win the order. The two countries have been in talks since March this year, and the negotiations have been progressing in the form of a free contract. “We do not intend to take on the Turkish nuclear plant order by incurring losses, but Korea is still the strongest candidate,” the official said.