Japanese ships to be barred from KEPCO contracts
The government plans to ban state-run electricity suppliers from contracting Japanese shipping firms to transport coal and other minerals from overseas, as part of its efforts to help prop up struggling local ship owners, Korea Times reports. If realized, Korea Electric Power Corp. (KEPCO) and its five affiliates will be obliged to obtain natural resources largely through domestic shipping companies.
The Ministry of Land, Transport and Maritime Affairs said Tuesday that Japanese shippers will not be allowed to carry coal for local electric power generators if Japanese power firms are confirmed to have forbidden Korean shipping operators from taking part in their bidding process for resources transportation.
"Local ship operators have been asking us over the years to mandate state-run power companies not to hire Japanese ships to bring coal into the country from Australia and other resource-rich nations," an official at the ministry’s shipping policy division said.
"We are currently trying to verify whether Japanese power generators have excluded Korean shippers. If confirmed, we would like to know what made them do so," he said.
The official said the ministry held a series of meetings with the Ministry of Knowledge Economy and other government agencies over the issue, adding if local ship owners are discriminated against in Japan, Japanese firms should also be discriminated against here under reciprocity principles.
"Domestic power companies argue that it is cheaper for them to hire Japanese ships. But we found that Korean shipping firms charge only 30 cents more per ton than their Japanese counterparts. For the national interest, it is desirable for electricity firms to employ local ships," the official said.
The Korea Ship-owner’s Association (KSA) welcomed the latest government move, saying state-run power companies should let local shipping firms bring in coal and other raw materials.
"We have been asking KEPCO and its five regional affiliates for years to stop doing business with Japanese shipping firms. But they have refused. As a last resort, we asked the government to step in and resolve the matter about a month ago," said a KSA executive, who did not want to be named.
He said POSCO and other large domestic companies that need to import raw materials from overseas let local shippers bring them into the country, urging electricity generators to do the same.
"Japanese power firms do not allow us to take part in bidding in order to give all their business to Japanese shipping firms. As a state-run enterprise, KEPCO and its subsidiaries should allow us to transport coal and other materials for them for the sake of the national interest," the executive said.
He then said more than 70 shipping firms here have gone bankrupt since the global financial crisis in 2008, adding many more are struggling to stay afloat amid the prolonged global economic downturn.
However, Korea South-East Power and four other regional electricity generators have dismissed KSA’s arguments, saying it is much cheaper to obtain coal via Japanese shipping operators.
They say they have to sign a contract with the shipper offering the lowest price for transporting coal, regardless of nationality, adding under the law they cannot discriminate against affiliates of Japanese shipping firms established here.