[Edaily Kim Sang-yoon Reporter Hwang Byung-seo] It has been confirmed that the reason South Korea and the U.S. have been unable to announce the Encinales Gas Combined Cycle Power Plant in Texas—which they have effectively selected as the first project under their $350 billion investment agreement—is due to disagreements surrounding “U.S. ownership” of individual projects. While the South Korea-U.S. Memorandum of Understanding (MOU) stipulates that the United States must wholly own the special-purpose vehicles (SPVs) established for individual projects—such as the power plant—the two sides have differing interpretations regarding whether the U.S. subsidiaries of South Korean companies can also be recognized as U.S.-owned entities. The South Korean negotiating team, including the Blue House and the Ministry of Trade, Industry and Energy, is currently engaged in final-stage negotiations ahead of the announcement of the first project next month.

According to a compilation of reports by Edaily on the 27th, South Korea and the U.S. are strongly considering the Encinal project as the first initiative under the $200 billion strategic investment agreement, but have yet to reach an agreement on key terms such as the equity structure of the project’s special purpose vehicle (SPV), board composition, voting rights, and the interest rate on the investment funds. The government is continuing negotiations with the goal of finalizing the first project by next month. A senior government official familiar with the matter stated, “There is a significant difference in the investment structure between a U.S. subsidiary of a South Korean company holding a stake and direct ownership by the U.S. government or a U.S. company,” adding, “We are discussing the relevant conditions with the U.S. side.”
According to the MOU signed last November, the U.S. will establish an umbrella investment SPV to manage the $200 billion project, and the U.S. or an entity designated by the U.S. will manage and control it as the general partner (GP) with unlimited liability. South Korea will provide funding to the investment SPV. Regarding the project SPVs established under it, the annex to the MOU defines them as “separate special-purpose entities wholly owned by the United States.”
The key issue is how to interpret the term “United States” in this context. It is reported that the U.S. side maintains the position that either the U.S. government or a U.S. entity designated by the United States must directly hold a stake in the project. Conversely, the South Korean side argues that since local subsidiaries established in the United States by South Korean companies are corporations organized under U.S. law, they should be permitted to hold shares.
If the U.S. interpretation prevails, South Korea may not become a shareholder in the power plant even though it is providing substantial funding. The U.S. side would likely control major decisions—such as operations, expansion, and divestiture—while South Korean companies would be limited to construction, equipment supply, or outsourced operations. Conversely, if a South Korean-affiliated local subsidiary secures a stake, it could participate in the board of directors and voting rights and also reap long-term operating profits and gains from appreciation in asset value. The criteria for “U.S. ownership” established in this first project are expected to be applied to subsequent projects in the nuclear power, energy, and semiconductor sectors as well.
Nils Walleson Osterberg, a research fellow at the Korea-U.S. Economic Institute (KEI), noted in a recent report, “While the MOU specifies that the U.S. will own the investment project, it does not specify whether ownership lies with the private or public sector, nor does it define ownership in concrete terms,” pointing out that differing interpretations of “U.S. ownership” could be a factor delaying the investment announcement.