SK Construction Wins $600 Million Uzbekistan Power Plant Modernization Project

Mubarek Gas Thermal Power Plant

[Asia Economy Reporter Onyu Lim] SK Engineering & Construction, which is strengthening ESG (Environmental, Social, and Governance) management, is taking charge of and actively promoting a modernization project for an aging power plant in Uzbekistan as part of its eco-friendly business.

On the 1st, SK Engineering & Construction announced that on the 27th of last month, it secured exclusive business development rights for the modernization and performance improvement project of the Mubarek gas-fired power plant through agreements with Uzbekistan’s Ministry of Energy, Ministry of Investment and Foreign Trade, and the Korea Energy Agency. The project cost is up to 600 million USD (approximately 670.5 billion KRW).

SK Engineering & Construction has adopted ESG as a new core value of management and is attempting to shift its portfolio toward eco-friendly and new energy businesses. Last year, it officially entered the environmental industry by acquiring EMC Holdings, the top comprehensive environmental company in Korea, and is expanding into environmentally friendly new energy businesses such as hydrogen fuel cells, green renovation, and renewable energy.

This contract, pursued as part of the green renovation business, includes provisions that the Uzbekistan government will mandatorily purchase the power generated by the plant for 25 years and supply the necessary fuel free of charge. Through this, stable income from power plant operations is secured, ensuring overall project stability, and greenhouse gas emissions per unit of power are expected to be reduced by more than 30%.

Due to the impact of COVID-19, no separate signing ceremony was held. SK Engineering & Construction President Jaehyun Ahn, Korea Energy Agency Chairman Changseop Kim, Uzbekistan Ministry of Energy Vice Minister Sherzod Khojayev, and Ministry of Investment and Foreign Trade Vice Minister Shukhrat Bapayev signed the contract through a non-face-to-face written method.

An SK Engineering & Construction official stated, "By demonstrating our capabilities as a global developer through eco-friendly projects like the exclusive rights obtained for the Mubarek thermal power plant, we plan to transfer practical eco-friendly business models to countries like Uzbekistan that require stable and sufficient power supply."

SK Engineering & Construction will act as the developer for this project, handling project acquisition, financing, investment, and operation. EPC (Engineering, Procurement, and Construction) will be carried out by capable domestic and international companies, and power plant operation will be assigned to a selected domestic power operation company to secure specialized expertise.

This project involves modernizing an aging power plant located in the Mubarek area, 520 km southwest of Tashkent, the capital of Uzbekistan, transforming it into an eco-friendly power plant. The Mubarek plant is a 60MW combined heat and power plant that began commercial operation in 1985. Having been completed over 30 years ago, its facilities have aged, necessitating improvements to reduce carbon dioxide and harmful substance emissions and upgrade it to an eco-friendly power plant.

SK Engineering & Construction plans to improve the aging facilities of the existing power plant and expand the power supply capacity by adding a 300 to 450MW eco-friendly, high-efficiency power plant. This is expected to contribute to stabilizing Uzbekistan’s power supply and economic development. The hot water generated during the process will be supplied as an energy source to nearby agricultural greenhouses, helping increase agricultural production and save energy, thereby contributing to social value creation.

While successfully executing this project, SK Engineering & Construction plans to continuously discover follow-up projects in Uzbekistan and leap forward as a Green Energy Provider that realizes ESG values.

This contract is a result of active cooperation between the governments of Korea and Uzbekistan. An SK Engineering & Construction official explained, "The role of the Korea Energy Agency, which made tireless efforts and support such as proposing efficiency improvement projects for aging power plants, was particularly important."

In October 2019, SK Engineering & Construction signed a memorandum of understanding for mutual cooperation on this project with the Korea Energy Agency and Uzbekistan’s Ministry of Energy. Based on the technical diagnosis and feasibility study of the Mubarek power plant conducted thereafter, it submitted a project implementation plan to the Uzbekistan government in December last year. With this contract as a milestone, SK Engineering & Construction plans to finalize project details with the Uzbekistan government and proceed with selecting EPC and O&M (Operation & Maintenance) companies and financing within this year.

Jaehyun Ahn, President of SK Engineering & Construction, said, “Based on SK Engineering & Construction’s excellent eco-friendly technology and accumulated experience, we will closely cooperate with the Korea Energy Agency and the Uzbekistan government to successfully carry out this project,” adding, “Through this project, we will also contribute to the economic and trade cooperation between the two governments.”

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