Russian Northern Caucasus Resorts Signs Landmark Investment Agreement with Korean Western Power and CHT Korea

ST. PETERSBURG, Russia, November 2, 2011 -

• First Phase to Reach $300 Million for Environmentally Advanced Electrical and Heating Plants
• For World’s Largest Tourism Project Worth $30 Billion in Russia’s North Caucasus Region
• Power System Will Integrate Renewable Energy Sources from Solar and Wind
• Will Also Supply Populations Near Planned Resorts and Drive Area’s Economic Growth

The Russian state company responsible for developing a $30-billion tourism project in the country’s mountainous North Caucasus region, including world-class skiing, unique mineral spas and the first modern beach resorts on the Caspian Sea, has signed a joint venture agreement with Korean Western Power Co., Ltd. (KOWEPO) and CHT Korea for construction of up to five new environmentally advanced power stations to supply electricity and heating both for tourist sites and surrounding populations.

“The provision of a high-capacity, modern power-generation network incorporating renewables and supplying both the new resorts and neighboring communities is a major step forward in our master plan to develop a region-wide, ecologically sustainable tourism industry to spur economic growth in the North Caucasus,” said OJSC Northern Caucasus Resorts Company (NCRC) Chairman Akhmed Bilalov.

“We are honored to be able to make such a significant contribution to one of the Russian federal government’s most important social and economic development projects and look forward to deploying our most environmentally friendly technology in this region of supreme natural beauty and high ecological sensitivity,” said KOWEPO President and CEO Kim Moon-Duk.

The signing took place here against the background of the 2nd International Forum - ‘Russia/Korea Dialog’ aimed at strengthening bilateral trade and investment.  NCRC will own a 50-percent stake in the JV, while KOWEPO will hold 40 percent.  A third company, CHT Korea, will have a ten-percent share.

Precise details of the project’s total production capacity and technological configuration are forthcoming by year’s end.  Preliminary plans call for up to five power plants using coal fuel with state-of-the-art emissions scrubbing and carbon sequestration and integrating renewable energy from wind and solar sources.  The first phase of the joint project is expected to reach $300 million in investment.

State-owned NCRC is responsible for attracting both international and domestic investment and serves as the principal operating company for the ten-year, $30-billion tourism project.  The development will stretch 600 km from the beaches of the Caspian Sea nearly to the Black Sea coast, where the Sochi 2014 Winter Olympic Games will take place.  The new resorts are expected to attract yearly up to ten million skiers, eco-tourists, mineral spa enthusiasts and beach vacationers from Russia and Western Europe, as well as from the Middle East and China.  

The government has designated the 50,000-sq-km tourism development area as a special economic zone, offering investors a highly concessionary tax regime and state guarantees for up to 70 percent of the value of a given investment.  The endeavor is the centerpiece of a massive federal government initiative valued in the tens of billions of dollars to address the social and economic challenges of the North Caucasus.

The focal point of the planned new tourism industry for the region, which includes Europe’s highest mountain peak Elbrus (5,642 meters), is a cluster of five world-class ski resorts located in the Republic of Adygea, Krasnodar Region and parts of the North Caucasus Federal District, including Stavropol Region and the republics of Karachai-Cherkessia, Kabardino-Balkaria, North Ossetia and Dagestan.  The area, considered globally significant for biodiversity, is differentiated by its unique natural and cultural heritage.  It is widely regarded as the most unspoilt mountain ecosystem remaining in Europe and hosts 46 distinct indigenous cultures, some with ancient histories, and is home to four major UNESCO World Heritage sites.

“Our most valuable asset for this project is the region’s extraordinarily pristine environment,” said NCRC Chairman Mr. Bilalov, who also serves as vice president of the Russian Olympic Committee.  ”One of the key reasons we selected KOWEPO to build the power network for this critical project was their top-in-industry commitment to both environmental and social responsibility.  That is a fundamental requirement for all investors in this region.”

About NCRC

Moscow-based NCRC is a state enterprise charged by the Russian government to manage a $30-billion public-private initiative to build and operate five world-class skiing resorts in the Northern Caucasus as part of an official strategy to promote economic and social transformation of the region.  Later stages of the project will include mineral spas and beach resorts on the Caspian coast.  NCRC has been initially capitalized by a Russian government allocation of $2.0 billion.  Russian Olympic Committee Vice President Akhmed Bilalov serves as NCRC board chairman.

About KOWEPO

Korea Western Power Co., Ltd., a leading producer and innovator in the 21st-century Korean power industry, started its electricity business in April 2001.  KOWEPO was established upon the restructuring of the Korea Electric Power Corporation under the Korea Power Industry Restructuring Act.  The company accounts for approximately 13% of the Korean national generating capacity, mostly comprised of thermal, combined-cycle, and pumped-storage power plants.  KOWEPO employs about 1,900 people and is headquartered in Seoul, Korea.

Mark D’Anastasio, Emerging Markets Communications, LLC, +1-202-331-7751, mdanastasio at emcommunicate.com