South Korea’s Samsung C&T Corp. and Samsung Engineering Co. have decided to terminate a 2.8 trillion won ($2.50 billion) thermal power plant project in Kazakhstan due to delayed financing arrangements from the local government, the companies said in regulatory filings on Thursday.

Construction has remained suspended since last September.

In December 2014, the companies signed the contract over joint construction of the Balkhash Thermal Power Plant, a 1,320 megawatt coal-fired power plant in Ulken, Kazakhstan.

Construction began with the participation of Samsung C&T’s trading division in the country’s first build-transfer-operate (BTO) infrastructure project launched by the local government in March 2009.

Korea’s power supply monopoly KEPCO Corp. was due to operate the power plant after completion in 2020.

Samsung C&T’s trade division and Kazakh state-run energy company Samruk-Energy Company established joint venture BTPP for the construction project. Samsung C&T agreed to own 50 percent plus one share in BTPP. The construction was conducted by Samsung C&T’s construction division and Samsung Engineering, but the construction was stopped due to financial constraints last year as negotiations on financing guarantee from the Kazakh government ended in failure.

Samsung C&T said it decided to cancel the agreement after the local government began to re-examine the project from the beginning amid a global recession and low oil prices. Samsung C&T’s trade division exercised a put option for its stake in the joint venture to redeem early investment of $192.5 million.

The company also said it decided to terminate the project on Wednesday to minimize loss contingency before its put option expired. Construction expenses will be cleared after discussion.

Samsung C&T already set aside loss provision of 150 billion won for the project.

By Chung Wook and Kang Young-woon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]