Korea Western Power Co Ltd Rating Review Presentation

Korea Western Power Co. , Ltd. Rating Review Presentation to Standard & Poor’s 26 July 2007

Table of Contents Company Overview Operations Financial Management Concluding Remarks Rating Review Presentation to Standard & Poor’s 1

Introduction to KOWEPO Inception § Spun off from KEPCO in April 2, 2001 Ownership § 100% owned by KEPCO (54% owned by Korean Government) Generation Capacity § 9, 585. 3 MW (Operation: 8, 380. 1 MW, Under Construction: 1, 205. 2 MW) Total Assets Total Revenue Net Income Credit Ratings § 1 H 2007 : KRW 3, 720 bn (USD 4. 1 bn) § FY 2006 : KRW 3, 708 bn (USD 4. 0 bn) § 1 H 2007 : KRW 1, 535 bn (USD 1. 7 bn) § FY 2006 : KRW 2, 424 bn (USD 2. 6 bn) § 1 H 2007 : KRW 118 bn (USD 128. 8 mn) § FY 2006 : KRW 160 bn (USD 173. 9 mn) § S&P : A- (stable) / Moody’s : A 1 (stable) 1. Applied FX rate : KRW 920/USD 2. Rating Review Presentation to Standard & Poor’s 1 H 2007 financial figures are provisional figures 2

Operation Overview § Base load, intermediate load, and peak load account for 42%, 17% and 41% respectively in terms of generation capacity in operation § Over 85% of capacity is located in or near the Seoul and Gyeonggi metropolitan areas – Seoul and Gyeonggi metropolitan areas comprise approximately 40% of total national demand Generation Capacity by Type of Plant (1 H 2007) Coal LNG BC Oil Pumped Storage 4, 180 MW 4, 000 MW Gunsan C/C (700 MW) Taean T/P (500 MW) Cheongsong P/S (600 MW) Samrangjin P/S (600 MW) Taean T/P (3, 500 MW) Location of Plant Complex 1, 400 MW Pyeongtaek T/P (1, 400 MW) Seoincheon C/C (1, 800 MW) Seoincheon Seoul Metropolitan Area Pyeongtaek Taean Cheongsong Gunsan (under construction) Pyeongtaek C/C (480 MW) Samrangjin Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, P/S denotes “Pumped Storage” Rating Review Presentation to Standard & Poor’s 3

Power Plant Facilities in Operation § KOWEPO operates 37 generation units with total generation capacity of 8, 380. 1 MW in 5 different sites Plant Taean (Chungnam) Pyeongtaek (Gyeonggi) Fuel Type Number of Units Unit Capacity (MW) Total Capacity (MW) Bituminous 7 500 3, 500 - 1 0. 1 BC Oil 4 350 1, 400 4 80 320 GT: ’ 92. 6 1 160 ST: ’ 94. 6 8 150 1, 200 GT: ’ 92. 6 8 75 600 ST: ’ 92. 11 - 2 300 600 #1: ’ 85. 11, #2: ’ 85. 12 - 2 300 600 #1: ’ 06. 9, #2: ’ 06. 12 Type Thermal Solar Thermal Combined Cycle Seoincheon Combined (Incheon) Cycle Samrangjin Pumped (Gyeongnam) Storage Cheongsong Pumped (Gyeongbuk) Storage Total Rating Review Presentation to Standard & Poor’s LNG 37 Year of Establishment #1: ’ 95. 6, #2: ’ 95. 12, #3: ’ 97. 3, #4: ’ 97. 8 #5: ’ 01. 10, #6: ’ 02. 5, #7: ’ 07. 2 ’ 05. 8 #1: ’ 80. 4, #2: ’ 80. 6, #3: ’ 83. 5, #4: ’ 83. 8 8, 380. 1 4

Strategy – Develop Growth Engine § KOWEPO plans to maintain its leading market position and superior operating performance promoting growth with new plant constructions Type Generation capacity (MW) Expected completion of Construction Remarks Thermal 500 Aug 2007 - Combined Cycle 700 Nov 2009 - IGCC (Integrated Gasification Combined Cycle) 300 Sep 2015 - Dec 2012 § Consortium with Posco E&C, Daewoo E&C, Lotte E&C § Project financing § KOWEPO to be in charge of operation and maintenance June 2011 § Consortium with SK E&C, SK E&S § Project financing § KOWEPO to be in charge of operation and maintenance Dec 2013 § Consortium with Daelim Industry § Project financing § KOWEPO to be in charge of operation and maintenance Plant Under Construction Taean #8 Gunsan New Plants Taean Equity Investments Garorim Godeok Yangju Tidal Power Combined Cycle Rating Review Presentation to Standard & Poor’s 480 700 1, 400 5

Strategy – Diversify Revenue Sources § KOWEPO will diversify its revenue sources by investing in new business, overseas project, and new/renewable energy Plant Type Generation capacity (MW) - 923 Gcal/h Remarks New Business Community Energy System § Plan to use Seoincheon C/C’s stream and waste heat § Consortium with Lotte E&C, Incheon City Gas and Kenertec § Expected to begin providing heat from Jan 2008 Overseas Project 372 § Consortium with SK E&C / Project financing § BOOT (Build, Own, Operate, Transfer) § MOU agreement between the government of Laos and domestic consortium § KOWEPO to be in charge of operation and maintenance Thermal Power 400 § Consortium with Hanwha and Koresia / Project financing § BOOT (Build, Own, Operate, Transfer) § MOU agreement between the government of Sumatra and Koresia § KOWEPO to be in charge of operation and maintenance Samrangjin Solar Power 3, 000 k. W § Expected to complete construction in Dec. 2008 Taean Small Hydro Power 2, 200 k. W § Expected to complete construction in Sep. 2007 Laos Indonesia Hydro Power New/Renewable Energy Rating Review Presentation to Standard & Poor’s 6

Table of Contents Company Overview Operations Financial Management Concluding Remarks Rating Review Presentation to Standard & Poor’s 7

KOWEPO’s Market Position Generation Capacity Market Share (1 H 2007) Sales Volume Market Share (1 H 2007) (GWh) (MW) Total Generation Capacity 66, 673 MW Rating Review Presentation to Standard & Poor’s Total Electricity Sales 183, 259 GWh 8

Operational Efficiency § Thermal efficiency and utilization rate have been relatively stable over the years. § In the 1 H 2007, the utilization rate has substantially increased due to the completion of Taean #7 and the increased utilization rate of Pyeongtaek power plant Thermal Efficiency Rating Review Presentation to Standard & Poor’s Utilization Rate 9

Long-Term Supply Contracts § KOWEPO enters into long-term supply contracts to: – Control the costs of bituminous coal, oil and LNG amid the rising prices – Assure an adequate supply of the raw materials for a smooth operation Bituminous Coal Contracts Bituminous ‘ 01. 04 ~ ‘ 09. 12 ‘ 04. 01 ~ ‘ 08. 12 ‘ 05. 01 ~ ‘ 07. 12 ‘ 04. 07 ~ ‘ 10. 06 ‘ 95. 01 ~ ‘ 07. 12 ‘ 07. 01 ~ ‘ 09. 12 China Indonesia 3, 965 (47%) 1, 000 500 960 180 2, 640 (31%) 500 ‘ 99. 04 ~ ‘ 07. 07 ‘ 96. 01 ~ ‘ 07. 07 ‘ 01. 07 ~ ‘ 09. 06 ‘ 06. 04 ~ ‘ 09. 03 ‘ 03. 10 ~ ‘ 09. 12 Indonesia 500 ‘ 04. 10 ~ ‘ 07. 12 Indonesia 200 ‘ 05. 01 ~ ‘ 07. 12 Indonesia 325 ‘ 06. 04 ~ ‘ 09. 03 Indonesia 300 ‘ 06. 04 ~ ‘ 09. 03 1, 825 (22%) 8, 430 (100%) Supplier SK Corp. SK Incheon Oil Contract amount 279, 000㎘ 3, 511㎘ Terms ‘ 07. 07 ~ 12 Country Xstrata Ensham Peabody Centennial BHP-Billiton Resouce Pacific Flame ECM Australia - Sub-total SCIEGC CCIEC SHENHUA Minmetals China - Sub-total Indominco ABK Tanito Harum Peabody ECM Indonesia - Sub-total Fuel Oil Type B. C oil (Sulfa 2. 5%) Kerosene for boiler Rating Review Presentation to Standard & Poor’s Australia Australia Contract Amount (1, 000 ton/year) 1, 100 500 240 500 250 500 375 Supplier LNG Supplier LNG KOGAS Contract amount (1, 000 ton/year) 1, 490 Terms ‘ 07 – ‘ 26 (20 year) 10

Table of Contents Company Overview Operations Financial Management Concluding Remarks Rating Review Presentation to Standard & Poor’s 11

Capital Structure (1 H 2007) Assets § KRW 3, 720 billion – Fixed Assets/Total Assets Ratio : 89. 4% Liability § KRW 1, 351 billion – Liability-to-Equity Ratio : 57. 0% Shareholder s’ Equity § KRW 2, 369 billion – Stake is wholly owned by KEPCO Revenue § KRW 1, 535 billion EBIT § KRW 177 billion – Net Income : KRW 118 billion Rating Review Presentation to Standard & Poor’s Capital Structure 12

Financial Performance § Sales revenue shows a stable growth rate since 2004 § EBIT continues to remain stable since 2004 but in the second half of 2006, EBIT declined due to temporary price cut in CP of base load facilities § EBIT is expected to improve going forward due to the CBP market improvement and operation of Taean #7 and 8 Revenue Rating Review Presentation to Standard & Poor’s EBIT 13

Healthy Coverage and Leverage Ratio § Coverage ratios have been stable and relatively strong due to KOWEPO’s proactive debt restructuring efforts § KOWEPO has acquired the right to use connecting line to transmission facilities of KEPCO in 2007, in which KOWEPO is making installment payments to KEPCO for the usage of the facilities. However, it is fully compensated by capacity payment. Therefore, any increase in leverage ratio from this does not mean KOWEPO’s financial status deteriorates Coverage Rating Review Presentation to Standard & Poor’s Leverage 14

Peer Comparison (FY 2006) Revenue EBIT Net Income EBIT Margin ROE Leverage Rating Review Presentation to Standard & Poor’s 15

Debt Profile and Strategy § KOWEPO prefers long-term funding of at least 5 years as the plant construction usually takes around 5 years to complete § The company prefers to borrow 60% to 70% of its total debt in KRW and the remaining in foreign currencies § 87% of KOWEPO’s debt carries fixed interest rate, while 13% is in floating rate § All of total debt is unsecured Type of Instrument (1 H ‘ 07) Currency Distribution (1 H ‘ 07) Debt Repayment 185. 0 Repaid KRW 182. 5 bn in the 1 H 07 Total Debt Profile : KRW 832. 6 billion Rating Review Presentation to Standard & Poor’s 16

Table of Contents Company Overview Operations Financial Management Concluding Remarks Rating Review Presentation to Standard & Poor’s 17

Concluding Remarks § Improving economic fundamentals with structural improvements in South Korea and eased political tensions from North Korea § Healthy operating environment provided by favourable industry conditions § Continued supportive regulatory frame work and the expected well-paced, gradual approach in industry restructuring § Maintains one of the leading positions in terms of Management Appraisal of Gencos by KEPCO. § Strong financial performance and debt servicing ability supported by stable, recurring revenue and cash flow § Robust capital structure and strong financial flexibility to support the capex plan Rating Review Presentation to Standard & Poor’s 18