[Exclusive] 7 Million Won Lawsuit Over 2.4 Million Won Payment... Shadows of Renewable Energy Business

Energy Corporation Engages in Litigation to Recover 3 Years of Overdue Corporate Contributions
Namdong Power Faces Mismanagement of 800 Million KRW Technical Support Fees for Nepal Hydropower
Local Governments Struggle with Renewable Energy Supply Obligation Regulations

Floating Solar Power (Reference Photo)

[Asia Economy Reporter Kim Bo-kyung] The Korea Energy Agency faced a difficult situation while supporting renewable energy companies. Three years ago, through the "Renewable Energy Overseas Market Development Support Project," it provided a support fund of 10 million KRW to Company A, a floating solar power-related company located in Sejong. However, the company has yet to return the 2.4 million KRW it was supposed to bear. After much deliberation, the agency decided to pursue a lawsuit, spending three times the amount of the company’s burden to recover the funds.

It has been revealed that the government is encountering considerable difficulties while pushing renewable energy projects such as solar and wind power through public institutions. There have been cases where lawsuits were filed to recover money owed by companies, as well as instances where 800 million KRW in technical support fees were not received due to lack of approval from overseas governments.

According to industry sources on the 12th, in February 2018, when solar power company A applied for booth rental fees, installation costs, and logistics fees to participate in an exhibition held in Japan, the Energy Agency supported 9.7 million KRW and agreed to recover 2.4 million KRW from the company. This was in accordance with the regulation that companies must bear 25% of government support funds. However, the company has not returned the 2.4 million KRW burden fee even after three years, not only missing the originally scheduled August of that year. An agency official stated, "We continuously requested payment of the exhibition participation burden fee, but the company delayed the return citing financial difficulties," adding, "Currently, all contact has been completely cut off."

Ultimately, the agency initiated a lawsuit procedure to recover 2.4 million KRW by hiring a lawyer at a cost of 7 million KRW through the ‘payment order application → compulsory execution’ process. This absurd situation where the cost of recovery exceeds the amount to be recovered has occurred. However, the agency is willing to bear the cost. The official said, "We judged that we must do what is necessary to recover the company’s burden fee," and added, "Since the company is not bankrupt, we decided to proceed with the lawsuit."

Korea South-East Power Corporation Headquarters

There is also a case where 800 million KRW in technical support fees were not received during a hydropower project overseas. Korea South-East Power Co. (KOEN) has been conducting the UT-1 hydropower project in Nepal since 2012. They established a Special Purpose Company (SPC), dispatched four local employees, and have been receiving monthly technical and management support service fees under the name of technical support fees and labor costs.

However, KOEN has not received a total of 800 million KRW in service fees since the second quarter of 2019. The money, which should have been recognized as overseas business revenue, was not properly managed and was omitted from the financial statements. A KOEN official explained, "Since Nepal is a developing country, every time dollars leave the country, approval from the Nepal Central Bank is required. However, due to differences in opinion between the Nepal Investment Board and the Central Bank, as well as the COVID-19 pandemic, approval has been delayed."

Despite not receiving payment for a long time, KOEN not only failed to make efforts to recover the fees but also did not track the outstanding receivables, resulting in no record in the financial statements. If this had not been uncovered through an internal audit last December, the statute of limitations for non-payment could have expired, and the money might never have been recovered. The audit office stated in the audit report, "The responsible department did not make active efforts to resolve the reasons for the payment approval rejection, resulting in long-term uncollected amounts," and added, "Because revenue was not recognized, long-term receivables were not recorded in the financial statements." The department was instructed to "take administrative actions to suspend the statute of limitations for payment recovery."

Local governments are struggling under the mandatory renewable energy supply regulations. According to the Enforcement Decree of the Act on the Promotion of Development, Use, and Diffusion of New and Renewable Energy, public institutions constructing or expanding buildings with a total floor area of 1,000㎡ or more must supply at least 30% of the building’s energy consumption from new and renewable energy sources. The mandatory renewable energy supply ratio has been gradually increased from 10% in 2011 to 30% last year and will expand to 40% by 2030. Since construction permits are not granted without installing appropriately sized renewable energy facilities, local governments reluctantly comply with these regulations. However, this has led to additional construction costs and unexpected difficulties, causing urgent design changes.

Ulsan Ulju-gun plans to build a 180 kW solar power facility by investing an additional 500 million KRW of local government budget for the construction of the Jungbu Comprehensive Welfare Town. Initially, the plan was to install it on the building rooftop, but due to insufficient sunlight caused by surrounding high-rise apartments, the plan was changed to utilize the parking lot area. A local government official lamented, "There are many cases where it is difficult to secure land for solar power facility installation."

This content was produced with the assistance of AI translation services.