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Contingencies and Commitments
 12 Months Ended
Dec. 31, 2020
Contingencies and Commitments [Abstract]  
Contingencies and Commitments
50.

Contingencies and Commitments

 

(1)

Ongoing litigations and claims related with contingent liabilities and contingent assets as of December 31, 2019 and 2020 are as follows:

 

     2019      2020  
     Number
of cases		      Claim
amount		      Number
of cases		      Claim
amount		  
     In millions of won  

As the defendant

      586      ￦ 697,835        663      ￦ 550,535  

As the plaintiff

      199        707,287        200        729,798  

A group of plaintiffs (consisting of 2,167 individuals) filed a lawsuit against NSSC (Nuclear Safety and Security Commission) regarding NSSC’s approval on May 18, 2015 of extending the operation of Wolsong unit 1 nuclear power plant. The appeal has been dismissed on May 29, 2020, resulting in plaintiffs’ loss. Also, Greenpeace and others filed an administrative litigation against NSSC requesting cancelation of the construction permit of Shin-Kori unit 5 and 6 in September 12, 2016 and lost the lawsuit in February 14, 2019. They appealed the case in March 18, 2019, but the appeal had been dismissed on January 8, 2021. Thus plaintiffs filed an appeal to the Supreme Court of Korea. The Company joined these litigations as a stakeholder after obtaining permission from the court.

As of December 31, 2020, in connection with Shin-Hanul unit 3 & 4, the Company has received communications from a vendor for costs incurred for the preliminary work of the main equipment and associated compensation due to the discontinuation of the construction. The Company does not believe that it has a present obligation to this vendor, and that it is probable that the Company will prevail if a lawsuit is filed against the Company. In addition, the Company cannot reliably estimate the potential economic outflow related to the obligation as of December 31, 2020.

 

The Company is the defendant against a number of claims. The following is potentially significant ongoing claims pertaining to the Company:

 

  ①

There is an ongoing claim against the Company from a group of plaintiffs (consisting of 3,910 individuals) regarding the contribution to plan assets and payment of retirement benefits. The Company recognized ￦11,730 million as litigation provisions in relation to the lawsuit.

 

  ②

There is an ongoing claim against the Company due to disagreements over contract details regarding the construction of the waste refinement power generation plant for Next Energy Co., Ltd., including commencement of commercial operation, however, the Company has not recognized any provision, as the outcome of the lawsuit and the related amount and timing of economic benefit outflow that the Company may be liable for cannot be reasonably estimated as of December 31, 2020.

 

  ③

There are multiple ongoing claims against the Company related to ordinary wages, requesting payment of unpaid wages. The Company believes that the possibility of the outflow of economic benefits is probable on the ongoing and the expected lawsuits. Accordingly, the Company recognized ￦8,307 million as litigation provisions in relation to the lawsuit as of December 31, 2020.

In addition to the abovementioned significant ongoing claims, there are 10 arbitration cases pertaining to the Company as of December 31, 2020 and the significant arbitration cases for the year ended December 31, 2020 are as follows:

 

  ①

The Company has been accused of breach of contract in relation to ERP software, which is provided by SAP Korea Ltd. The litigation was filed in the International Court of Arbitration of the International Chamber of Commerce. The Company has recognized ￦1,319 million of litigation provision in relation to the lawsuit.

 

  ②

In relation to the electric power IT modernization project in Kerala, India, Enzen, a subcontractor, filed an arbitration against the Company to the Indian Council of Arbitration due to disagreements in the contract, but the Company has not recognized any provision because the amount and timing of economic benefit outflow cannot be reasonably estimated.

 

  ③

Two companies including GE Energy Products France SNC filed an arbitration against the Company to Korea Commercial Arbitration Board regarding additional payment of construction costs, but the Company has not recognized any provision because the probability of economic benefit outflow is remote and the related amount cannot be reliably estimated.

 

(2)

Guarantees of payments and commitments provided to other companies as of December 31, 2019 and 2020 are as follows:

 

  ①

The Company has outstanding borrowings with a limit of USD 275,600 thousand from its creditors such as International Finance Corporation. Regarding the borrowing contract, the Company has guaranteed capital contribution of USD 69,808 thousand and additional contribution up to USD 19,000 thousand for contingencies, if any. Moreover, for one of the electricity purchasers, Central Power Purchasing Agency Guarantee Ltd., the Company has provided payment guarantee up to USD 2,777 thousand, in case of construction delay or insufficient contract volume after commencement of the construction.

 

  ②

The Company has provided PT. Perusahaan Listrik Negara performance guarantee up to USD 2,293 thousand and investment guarantee up to USD 43,500 thousand to Mizuho bank and others in proportion to its ownership in the electricity purchase contract with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

  ③

The Company has provided MUFG Bank, Ltd. (MUFG) borrowing guarantee up to USD 41,258 thousand in proportion to its ownership in the equity bridge loan (EBL) guarantee with PT. Cirebon Energi Prasarana in relation to the second electric power generation business in Cirebon, Indonesia.

 

  ④

The Company has provided the Export-Import Bank of Korea, BNP Paribas and ING Bank with the guarantees of mutual investment of USD 2,192 thousand, which is equivalent to the ownership interest of PT BS Energy and PT Nusantara Hydro Alam, in order to guarantee the expenses related to hydroelectric power business of Tanggamus, Indonesia.

 

  ⑤

The Company has provided USD 16,000 thousand of business performance guarantees to AEP Texas, Inc., for the construction, ownership, operation, and related cost-bearing implementation of electric power transmission equipment regarding Concho Valley solar business in the United States.

 

  ⑥

The Company has provided a guarantee to complete the construction of the waste oil refining power generation plant of Next energy Co.,Ltd. (contract amount : ￦14,700 million) to the financial institution agents, thus the Company is liable to compensate to financial institution agents for the any damages incurred in the event of incompletion of the construction. Also, the power generation guarantee agreement was concluded in connection with the consignment service for management and operations (the repayment period of the principal of the loan) after the completion of the construction. If the amount of power generated falls short of the contracted power generation amount, the Company will be liable to pay compensation for the shortage. The Company has recognized ￦13,500 million as a provision based on the assessment of expected outflow of resources.

 

  ⑦

The Company has provided the syndicate of lenders of PT Indo Raya Tenaga, the business corporation of PT Barito Wahana Tenaga, a guarantee by establishing the right of pledge on the shares of PT Barito Wahana Tenaga for project financing of PT Barito Wahana Tenaga as of December 31, 2020.

 

(3)

Credit lines provided by financial institutions as of December 31, 2020 are as follows:

 

Commitments

   

Financial institutions

   

Currency

   Credit limit      Used amount  
          In millions of won and thousands of
foreign currencies		  

Commitments on Bank-overdraft

    Nonghyup Bank and others    KRW     1,936,500        229,960  

Commitments on Bank-daylight overdraft

    Nonghyup Bank    KRW     280,000        —    

Limit amount available for CP

    Hana Bank    KRW     1,150,000        1,150,000  

Limit amount available for card

    Hana Bank and others    KRW     47,104        5,378  
   Banco de Oro    PHP     5,000        3,000  

Loan limit

    Kookmin Bank and others    KRW     1,752,333        957,924  
   DBS Bank and others    USD     1,809,700        55,393  

Certification of payment on payables from foreign country

    Nonghyup Bank    USD     8,700        7,912  

Certification of payment on L/C

    Shinhan Bank and others    USD     938,400        90,240  
   Mizuho Bank    MXN     3,666        3,666  

Certification of Performance guarantee on contract

   

Seoul Guarantee Insurance

and others

    KRW     66,890        59,677  
   First Abu Dhabi Bank and others    USD     1,036,334        834,223  
  

Korea Development Bank

and others

    JPY     637,670        637,670  
   Hana Bank    EUR     4,065        4,065  
   Shinhan Bank    INR     6,806        6,806  
   Hana Bank    CAD     148        148  
   Maybank    MYR     7,500        7,500  
   Hana Bank    SAR     68,054        68,054  

Certification of bidding

    Hana Bank    USD     10,000        197  
   Hana Bank    EUR     2        2  

Advance payment bond, Warranty bond, Retention bond and others

    Seoul Guarantee Insurance    KRW     40,153        40,153  
   Export-Import Bank of Korea and others    USD     550,616        498,761  
   Hana Bank    SAR     6,508        6,508  
   Hana Bank    MXN     20,538        20,538  

Others

    Nonghyup Bank and others    KRW     654,162        32,009  
   Export-Import Bank of Korea and others    USD     2,268,158        1,819,226  
   Shinhan Bank    JPY     381,210        381,210  
   Standard Chartered    AED     50        50  
   Shinhan Bank    MXN     6,471        4,901  

Inclusive credit

    Hana Bank    KRW     8,000        927  
   Hana Bank and others    USD     30,722        17,236  
   Shinhan Bank    INR     70,028        70,028  

Trade finance

    BNP Paribas and others    USD     750,000        —    

 

(4)

As of December 31, 2019, blank check and assets provided as collaterals or pledges to financial institutions by the Company are follows:

 

Guarantor

   

Guarantee

   

Type of guarantee

   

Currency

   Amount     

Description

     In millions of won and thousands of foreign currencies

Mira Power Limited

    International Finance Corporation and others   

Property, plant and

equipment and others

    USD     275,600      Collateral for borrowings(*1)

Tamra Offshore Wind Power Co., Ltd.

    Kyobo Life Insurance Co., Ltd. and others   

Property, plant and

equipment and others

    KRW     171,600      Collateral for borrowings(*2)

SE Green Energy Co., Ltd.

    DB Insurance Co., Ltd. and others   

Property, plant and

equipment and others

    KRW     149,500      Collateral for borrowings(*2)

Gyeonggi Green Energy Co., Ltd.

   

Korea

Development

Bank and others

   

Cash and cash

equivalents

    KRW     327,800      Collateral for borrowings(*2)

Commerce and Industry Energy Co., Ltd.

    IBK and others   

Land, buildings,

structures and

machinery and others

    KRW     110,500      Collateral for borrowings(*2)

KOSPO Youngnam Power Co., Ltd.

   

Shinhan Bank

and others

   

Cash and cash

equivalents

    KRW     396,120      Collateral for borrowings(*2)

Gyeongju Wind Power Co., Ltd.

   

Samsung Fire &

Marine Insurance

Co., Ltd. and

Others

   

Property, plant and

equipment and others

    KRW     110,240      Collateral for borrowings(*2)

Korea Offshore Wind Power Co., Ltd.

   

Woori Bank and

Others

    Utility plant and others    KRW     293,400      Collateral for borrowings(*2)

Qatrana Electric Power Company

   

The Islamic

Development

Bank and others

   

Finance lease receivable

and property, plant and equipment and others

    JOD     236,570      Collateral for borrowings(*1)

KST Electric Power Company, S.A.P.I. de C.V.

   

The Export—Import

Bank of Korea and

others

   

Finance lease receivable

and property, plant and

equipment and others

    USD     401,277      Collateral for debt securities (*1)

Incheon Fuel Cell Co., Ltd.

   

Kookmin Bank and

others

   

Cash and cash equivalents

and others

    KRW     276,960      Collateral for borrowings (*2)

TS Energy No. 25 Co., Ltd.

   

Kyobo Life

Insurance Co., Ltd.

and others

   

Property, plant and

equipment and others

    KRW     521,281      Collateral for borrowings (*2)

 

(*1)

This is based on the amount of loan commitment limit.

 

(*2)

As of December 31, 2020, the Company has established guarantees for pledge for transfer of rights of long-term borrowings, pledge for insurance claims, pledge for shares, etc.

The Company has ￦1,197 million of project loans from Korea Energy Agency as of December 31, 2020. The Company has provided a blank check as a repayment guarantee.

 

(5)

The Company temporarily suspended operations of the Gangneung hydroelectric generating plant, with a carrying amount of ￦69,532 million as of December 31, 2020, to improve the quality of water used in generating electricity. The expenses related to the suspension of operations of ￦46 million and depreciation on the idle assets of ￦6,604 million are recorded in other expenses for the year ended December 31, 2020. Regarding the improvement of water quality, the results of damages compensation for the local residents cannot be reasonably estimated, and the Company is in negotiations with Gangneung City and related stakeholders to restart the Gangneung hydroelectric generating plant as of December 31, 2020.

 

(6)

Due to the Korean government’s announcement of suspension of operation in the Gaeseong Industrial District, it is uncertain if the Company can exercise the property rights for the Company’s facility in the Gaeseong Industrial District as of December 31, 2020. The book value of facility is ￦15,524 million and the amount of trade receivables related to the companies residing in Gaeseong industrial complex is ￦2,911 million. The outcome of this event cannot be reasonably estimated as of December 31, 2020.

 

(7)

In connection with the electric power IT modernization project in Kerala, India, negotiations are underway due to disagreements in the contract regarding the existence and the scope of a warranty obligation. However, the Company has not recognized any provision because the amount and timing of economic benefit outflow cannot be reasonably estimated as of December 31, 2020.

 

(8)

To prevent the spread of COVID-19, a variety of prevention and control measures, including movement restrictions, are being implemented worldwide, and as a result, the global economy is being affected extensively. In addition, various forms of government policies are being announced to cope with COVID-19. The Company was unable to reasonably estimate the impact of COVID-19 and the impact of the government support policies on the Company’s consolidated financial statements as of December 31, 2020, and the resulting effects have not been reflected in the consolidated financial statements.