Creditors will lend an additional 1.2 trillion won ($1 billion) to the financially distressed Doosan Heavy Industries & Construction.
The state-owned Korea Development Bank and Export-Import Bank of Korea previously pledged 2.4 trillion won in emergency loans to the company.
The latest loan was extended on the condition of Doosan Heavy carrying out a self-rescue plan that was worked out with creditors and submitted to the government last month.
In exchange for the loans, the firm should be born again as an environmentally friendly energy business, reducing its nuclear and coal power businesses while building up wind power and gas turbine projects.
Considering environmental problems, reducing coal power is sensible, but it is questionable whether wind power and gas turbines are the way to go.
Financial difficulties began at Doosan Heavy before the launch of the current administration because its business was centered on coal power, the long-term prospects of which are dim. However, it is undeniable that it was directly hit by the current government’s sudden change of course toward phasing out nuclear energy.
This is why Rep. Joo Ho-young, floor leader of the main opposition United Future Party, asked President Moon Jae-in to modify his nuclear energy policy in their recent meeting. He noted that policy changes are needed to prevent Korea’s nuclear power industry from collapsing. Moon replied to the effect that he had no intention of modifying his policy.
It will be difficult for Doosan Heavy to recover as long as the government clings to its nuclear phase-out policy.
Nuclear power is an area of strength for Doosan Heavy. To extend relief loans to the company is important, but it is desirable to let it continue to utilize its expertise at least for some time. If the construction of Sin Hanul nuclear power units 3 and 4 is resumed exceptionally, Doosan Heavy would get big relief in repaying the loans.
A ruling party lawmaker, who had campaigned against nuclear power for about two decades, said last month that Doosan Heavy will only have to retrain nuclear power employees as wind power workers.
This is absurd and out of touch with reality. It is questionable whether nuclear power engineers can be retrained to be wind power engineers as easily as the lawmaker said, and whether the lawmaker understands what it takes to generate electricity with nuclear fuel or wind power.
Wind and solar power cannot be used for a continuous supply of electricity because the resources are not available around the clock. Wind power plants have to stop when there is no wind or when it is too strong. Solar energy, likewise, depends on the weather. Efficiency is inevitably low.
Solar and wind power facilities also destroy the natural environment. Forests are cut down for the installation of solar panels.
Doosan Heavy has accumulated technology for about 30 years in the field of nuclear power facilities, holding 100 percent of the domestic market. The nuclear power business is said to account for about 13 percent of its total revenue.
If its nuclear power business shrinks to maintenance and dismantlement services, Korea’s nuclear energy industry will crumble.
To make matters worse, it is difficult for Doosan Heavy to generate revenue in the field of renewable energy in the short term.
The global wind power market is dominated by the US, Germany, Japan and Denmark.
The domestic solar cell market is effectively monopolized by China. All the solar cells built for the nation’s largest solar power complex in Haenam, South Jeolla Province, in 2018 were made in China.
Doosan Heavy embarked on the business of manufacturing gas turbines used to generate electricity with liquefied natural gas, but it is just a fledgling business for the company. Three foreign companies take up more than 70 percent of the global gas turbine market.
Liquefied natural gas power plants, regarded by the government as an alternative to nuclear power plants, depend on imported fuel.
The government’s stubborn policy to close all nuclear power plants in the country implies discarding accumulated domestic technology and relying on foreign fuel and foreign technology.
If the government wants to nurture a company in a new business field, it must first secure related know-how, technology and human resources through long-term investments.
It is risky to try to change a business model suddenly along a certain ideology disregarding reality.