[THE INVESTOR] Samsung C&T (028260) and Samsung Engineering (028050) announced on Sept. 1 that their 1.4 trillion won (US$1.25 billion) contract to build a thermal power plant in Balkhash, Kazakhstan has been canceled.

As the other party of the contract did not issue notice to proceed, the companies have notified cancellation of the contract, they explained.

Samsung C&T signed the contract in December 2014 to participate in the Kazakhstan government’s scheme to build a 1,320 megawatt coal-fueled thermal power plant near Lake Balkhash, the first private partnership in power generation sector for the CSI member state. 





Samsung C&T and Samsung Engineering have established a joint venture with Samluk Energy, a Kazak state-owned energy company, but the construction came to a halt, after progressing about 19 percent, in September over disagreement in financing.

Samsung C&T has notified that it will exercise put option rights on Aug. 31, seeking to recover US$193 million investment. The payment for construction will be negotiated afterward.

“Due to the recent decline in oil prices and the overall global economic environment, there were discussions on whether Kazakhstan (government) should continue the project,” said a Samsung C&T official, adding that “as the put option expires on Aug. 31, we have decided to cancel the project to minimize possible windfall.”

By Hwang You-mee (glamazon@heraldcorp.com)