By AsiaToday reporters Choi Sung-rok & Choi Won-young
It has been confirmed that not only the leading public corporations, such as South Korea Electric Power Corporation (KEPCO) and Korea Gas Corporation (KOGAS), but also private companies are leaving the Iranian market for fear of U.S. sanctions. It's been only two years since they proposed their ambitious projects worth several trillion won in 2016. Industry insiders say the government and companies are preparing for a new round of U.S. secondary sanctions which take effect on Iran in November.
According to officials from the government and the development industry on Sunday, KEPCO withdrew its branch and offices in Iran in July and disbanded its local task force. Its Iranian branch was established in 2016 to serve as a control tower for exploring new markets and projects in the Middle East and Central Asia.
Accompanying by-then-president Park Geun-hye in 2016, a South Korean business delegation of 236 companies visited Iran and promised large-scale economic cooperation to expand their presence in the Iranian market. For instance, KEPCO signed 10 business agreements with Iranian counterparts such as the Iran Power Generation and Transmission Company (TAVANIR) in a bid to tap into Iran's energy market.
The major projects included a $5 billion extra-high-voltage electrical grid construction project, and a $4 billion AMI system construction project. But all the projects were confirmed to have failed mainly due to revived U.S. trade sanctions.
KEPCO also pushed to build two combined cycle power plants with capacities of 500 megawatts and 550 megawatts in Iran, but failed to go beyond the negotiation stage. Its subsidiary also pushed to build a thermal power plant in the southeastern part of the country, but also failed to do so.
KOGAS also planned to participate in various projects in Iran, such as a construction project of a subsea gas pipeline, but most of them have been cancelled.
South Korean steelmaker POSCO recently abandoned its steel mill construction project in Chabahar, Iran, and closed its Iranian office. "We made this decision due to poor business conditions after the United States' announcement of its economic sanctions in May," POSCO said.
The industry observers believe the South Korean companies, concerned about the U.S. secondary boycott, are withdrawing the Iranian market. "There are several important negotiations with the United States. For instance, Section 232 of the Trade Expansion Act is an issue that affects the very existence of the national economy," a government official said.