South Korea on Tuesday named a combined-cycle gas power plant in Texas as its first US investment under the $350 billion package signed last year.
Backed by South Korea's investment commitment, the new plant in Encinal, Texas, will supply power to nearby AI data centers and semiconductor plants.
The plans were reported to the National Assembly by the Ministry of Trade, Industry and Resources, and the Ministry of Finance and Economy.
If the decision is confirmed, it will be the first US project to draw South Korean capital since last year's trade deal. Seoul and Washington agreed last year to lower US tariffs on most South Korean goods to 15 percent in exchange for Seoul's US investment package. Rep. Kim Sung-won of the main opposition People Power Party, who chairs the Trade, Industry, Energy, SMEs and Startups Committee at the National Assembly, told reporters Tuesday the government "guaranteed the commercial viability" of the proposed Texas project.
Rep. Oh Gi-hyoung, a Democratic Party of Korea lawmaker on the Strategy and Finance Committee, also said that the Finance Ministry had described the project as commercially viable. Oh did not elaborate on the project, citing the sensitivity of the matter.
In his recent press conference, President Lee Jae Myung revealed that "commercial viability" was a key issue for South Korea in negotiating the investment package deal with the US, and stressed that the government will not approve any investment that does not fit the criteria.
According to lawmakers briefed Tuesday, the government projects a return of up to $45 billion over the next two decades from the $23.2 billion investment.
A bipartisan special law overseeing South Korea's US investment package under the $350 billion deal states South Korea's investment would not require consent from parliament as long as commercial viability is proven. Instead, it requires the government to hold a briefing for relevant parliamentary committees.
Main opposition lawmakers doubted that the liberal government's claim of commercial viability had been fully proven in negotiations between Seoul and Washington.
People Power Party lawmaker Rep. Bae June-young raised doubts over whether South Korea has sufficient legal preparation for worst-case scenarios.
Bae, a Strategy and Finance Committee member, said People Power Party members raised concerns over whether contracts had been finalized and documents secured to protect initial investment capital.
The Texas plant was one of the three projects mentioned by Tuesday's parliamentary committee members. The other two are reportedly identified as a nuclear power project, with South Korean entities taking a stake in the US nuclear energy firm Westinghouse, and a liquefied natural gas project in Alaska.
Rep. Choi Soo-jin of the People Power Party said Tuesday that, based on her knowledge from the parliamentary committee, the government and the US are negotiating the exact stake South Korea would acquire in Westinghouse, adding Korea seeks a "5 to 10 percent stake."
Industry Minister Kim Jung-kwan said before the closed-door briefing to the parliament that the other two projects that "reflect interests from both countries" were to be briefed. Seoul has not confirmed whether to proceed with these projects, he added.
"The government has been engaging in intense consultations with the United States to pursue commercially sound projects," said Kim.
The minister stressed that any South Korea-backed project in the US should be more than a simple capital injection, instead regarded as "an opportunity to expand our companies' presence in the US market."
Deputy Prime Minister and Finance Minister Lee Hyoung-il, who was appointed on Tuesday to fill in for Koo Yoon-cheol, said he felt "a grave sense of responsibility" to handle the US investment projects at a time when economic and geopolitical uncertainties abound.
In March, a bipartisan special law passed the National Assembly to lay the legal framework for South Korea's investment in the US. A public-sector company dedicated to overseeing the US investment package set sail in June.
consnow@heraldcorp.com