South Korea Infrastructure Report Q3 2008

South Korea has a diversified power sector, which is mainly reliant on gas, coal and nuclear power to fuel it. At present, supply meets demand and allows the country enough of a surplus for export. In 2008, BMI estimates that the country will generate 445twh and consume 408twh. However, in the medium term, this looks set to change, as, by the end of the forecast period in 2012, South Korea will become a power importer as demand reaches 489twh with supply of only 485twh. South Korea is already implementing plans to boost its capacity and is expanding its nuclear sector to realise this. Over the last quarter, the government has announced plans to bring online a new fleet of reactors by 2030, and construction of the Shin-Kori 3 and 4 reactors has been given the go-ahead. The units look set to come online in 2013 and 2014 and will add another 2,700MW to South Korea's electricity generation capacity.

The transport infrastructure in Incheon, part of the Seoul metropolitan area, has received a boost in the last quarter, with projects coming online as well as a swathe of new projects being announced. In June 2008 the US$39.bn expansion project at Incheon International Airport was complete, increasing passenger and cargo handling capability at the facility by 47% and 67%, respectively. The cities trade sector will also look forward to the construction of Incheon's New Port, which has been announced and is scheduled to begin in 2011.

Tourism construction projects are to be on the up, with two theme parks announced in the last 12 months.

In November 2007 Universal Studios announced that it would develop a US$3.1bn theme park in Hwaseong City. The park, which is being built by POSCO Engineering and Construction, will include a hotel, golf course and rides. Over the last quarter, another theme park project has been announced.

Daewoo Motors Sales Corp has formed a partnership with Paramount Pictures to construct the Paramount Movie Park Korea, which is expected to require a total investment of US$1.4bn and will be located in Incheon.

South Korea is the base of a number of construction companies; however, the likes of Doosan Heavy Industries, Hyundai Engineering and Construction Co, Hanwha Engineering and Construction Corp, Daewoo Engineering & Construction and Samsung Engineering & Construction appear to be concentrating on winning international projects, especially in the power sector of the Middle East rather than on the domestic market. BMI believes that this is due to the lack of new building products coming online displayed in the low-growth figures for the sector.