Agreement to Supply Heat
KDHC, Kogas sign cooperation agreement to provide heat to Gangnam area

The Korea District Heating Corp.(KDHC) and the Korea Gas Corp.(Kogas) signed an agreement for cooperation to supply heat to the Gangnam district in southern Seoul on July 1 at Palace Hotel, the Ministry of Commerce, Industry and Energy said recently.
Dignitaries at the signing ceremony included Commerce, Industry and Energy Minister Lee Hee-beom and a number of legislators such as Reps. Kim Yong-kap, chairman of the Industry Resources Committee of the National Assembly, and Maeng Hyung-kyu, and Park Kye-dong, both parliamentarians from the area.
KDHC has been trying to supply heat to the Gangnam district by using heat supplied by the Korea Electric Power Corp.'s Bundang combined heat recycle station and this expand its business areas.
But the Korea Gas Corp. has been unwilling to supply gas to KDHC because it would lose its business in the Gangnam area if KDHC supplies heat to the region, which has been the focus of friction between the two state-run companies.
Because of the friction, 750 households in the Acrovista Apartment built in the former site of the Sampung Department Store has been unable to receive the supply of gas to operate its heat-generating boilers, which was installed in February of last year.
About 35,000 households in the residential complexes Nos. 1,2,3,4, built by Korea Housing Corp. and Dogok KHC apartments Nos. 1 and 2 complexes have been unable to get heat supplied because the KDHC has been unable to get the supply of gas from the Korea Gas Corp for its heat generating stations.
These areas will now get the supply of heat with KDHC and Kogas agreeing to cooperate with each other.
The companies agreed to cooperate with each other on the basis that KDHC will build combined heat and power cycle plant in place of boilers to expand its business areas and KDHC will share the cost of building additional support facilities to supply gas to the heat boiler system at the Acrovista apartment.
KDHC has also agreed to replace heavy oil for its heat generating boiler installation with gas to cope with the environmental regulations for clean air so that demand for gas would not be reduced.
Another factor that facilitated the two companies to come to a quick agreement was the pressure from legislators during the parliamentary audit
Officials of the Ministry of Commerce, Industry and Energy including Minister Lee himself discussed the issue of heat supply with officials of the two companies, fearing that it would cause instability in heat supply in the private sector if left unattended.
MOCIE Minister Lee said the cooperation agreement would be a good example for similar actions with local gas supply companies in the Seoul and local areas.
The agreement would show the way for settlement of possible frictions between gas suppliers and district heating firms in the provisional areas, protecting business interests of the concerned parties.
The agreement is also a winner for every party concerned including consumers, gas suppliers and the government as it meant the stable supply of gas as well as the assurance that consumers have the right to choose their own energy suppliers and the government will be able to use energy more effectively in line with its policy. nw

MOCIE Minister Lee Hee-beom (right) shakes hands with Managing Director Han Tae-il of KDHC after signing an agreement to supply heat to the Gangnam area in Seoul