This article was published on July 30, 2025, at 4:30 p.m. on the ChosunBiz MoneyMove site.
Korea Electric Power Corporation (KEPCO) has launched the sale of its Jordan power plant project to reduce liabilities exceeding 200 trillion won. KEPCO has shifted the sale method, initially planned as a competitive bid, to a private deal. This is interpreted as an effort to increase the likelihood of completing transactions by contacting potential buyers individually.
According to investment bank (IB) industry sources on the 31st, KEPCO has appointed EY Han Young as the lead manager for the sale of the Al-Katrana gas combined cycle plant assets in Jordan. It has been confirmed that the sellers have completed the distribution of teaser letters to potential buyers and are currently conducting preliminary bidding. They plan to receive non-binding offers by the 6th of next month and select eligible bidders from the shortlist.
The Al-Katrana power plant in Jordan is a gas combined facility that cost $461 million (about 640 billion won) to build and has a capacity of 373 megawatts (MW). KEPCO holds an 80% equity stake in the project company 'Al-Katrana OpCo' through its intermediate holding company, Al-Katrana HoldCo. The remaining 20% equity is held by Saudi Arabia's Xenel Industries.
The sale targets KEPCO's 36.25% equity stake in Al-Katrana HoldCo, along with shareholder loans equivalent to 36.25%, which include accrued interest. These rights include receiving shareholder loans and unpaid interest recorded in Al-Katrana HoldCo's financial statements according to the principal ratio.
There is also a loss compensation clause to prepare for potential future legal amendments. An IB industry associate noted, "When executing infrastructure investments for long-term projects like this, it is usual to include provisions that allow for cost compensation and fee adjustments in the event of tax increases or heightened environmental regulations during legal modifications."
KEPCO signed an implementation guarantee contract (IA) with the Jordanian government and the Jordan Ministry of Energy and Mineral Resources (MEMR) in April 2009, and also entered into a power purchase agreement (PPA) with the Jordan Electric Power Company (NEPCO) to supply electricity until 2035. An industry source explained, "The maturity date of the senior debt for the Al-Katrana gas combined cycle project is due in 2027, after which all cash flows until the end of the operating period can be distributed to equity investors," adding that even after the sale, KEPCO's structure allows it to maintain a majority stake to generate non-financial synergies.
So far, the Al-Katrana power plant's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin stands at 70%. With approximately 95% of the operating revenue composed of fixed capacity charges (FCC), it is an asset with guaranteed stable cash flow. In the first half of this year, adjusted sales were about 46.3 billion won, while EBITDA was 36.7 billion won. This year's annualized EBITDA is estimated at around 73.3 billion won (margin rate of 78.9%). The sellers emphasized in the teaser letter, "Every year, refugees from various parts of the Middle East enter Jordan, leading to a continuous increase in electricity demand," and that "there is upside potential from extending the PPA contract."
In the industry, it is anticipated that KEPCO's subsidiary KEPCO KPS or financial investors (FIs) managing infrastructure funds will show interest in the Jordan power plant. Notably, during the selection process for the sale lead manager, KEPCO requested in the request for proposal (RFP) an 'appropriate pricing assessment method for transactions among related parties.' This indicates that the subsidiary KEPCO KPS is considering pursuing the acquisition. Especially with the shift in the sale method to a private deal, determining an 'appropriate price' has become increasingly important.
An IB industry official stated, "Since transactions are conducted between affiliated companies, there is a potential legal risk if the appropriate valuation fails to be set." If the equity is traded at an excessively high price, KEPCO KPS could face controversy over breach of trust, and conversely, if it is sold too cheaply, it could be interpreted as a breach of trust by KEPCO.