Korea Western Power Co., Ltd. Rating Review Presentation to Standard & Poor’s 26 September 2008

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

2 Rating Review Presentation to Standard & Poor’s Introduction to KOWEPO 1. Applied FX rate : KRW /USD (Bloomberg as of June 30, 2008) InceptionInception  Spun off from KEPCO in April 2, 2001 OwnershipOwnership  100% owned by KEPCO (51% owned by Korean Government) Generation Capacity  9,603.3 MW (Operation: 8,885.3 MW, Under Construction: 718 MW) Total Assets  1H 2008: KRW 3,750 bn (USD 3.6 bn)  FY2007: KRW 3,885 bn (USD 3.7 bn)  1H 2008: KRW 3,750 bn (USD 3.6 bn)  FY2007: KRW 3,885 bn (USD 3.7 bn) Total Revenue  1H 2008: KRW 1,702 bn (USD 1.6 bn)  FY2007: KRW 3,069 bn (USD 2.9 bn)  1H 2008: KRW 1,702 bn (USD 1.6 bn)  FY2007: KRW 3,069 bn (USD 2.9 bn) Net Income  1H 2008: KRW 14 bn (USD 13.4 mn)  FY2007: KRW 175 bn (USD mn)  1H 2008: KRW 14 bn (USD 13.4 mn)  FY2007: KRW 175 bn (USD mn) Credit Ratings  S&P : A- (stable) / Moody’s : A1 (stable)

3 Rating Review Presentation to Standard & Poor’s Operation Overview Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, P/S denotes “Pumped Storage”  Base load, intermediate load, and peak load account for 45%, 16% and 39% respectively in terms of generation capacity in operation  Over 86% 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 1,400MW Taean T/P (4,000 MW) Pyeongtaek T/P (1,400 MW) 4,198MW 4,000MW Seoincheon C/C (1,800 MW) Samrangjin P/S (600 MW) Cheongsong P/S (600 MW) Pyeongtaek C/C (480 MW) Location of Plant Complex Taean Pyeongtaek Gunsan (under construction) Cheongsong Coal LNG BC Oil Pumped Storage Seoincheon Samrangjin Seoul and Gyeonggi Metropolitan Area Gunsan C/C (718 MW) Generation Capacity by Type of Plant 4,198MW

4 Rating Review Presentation to Standard & Poor’s Power Plant Facilities in Operation PlantType Fuel Type Number of Units Unit Capacity (MW) Total Capacity (MW) Year of Establishment Taean (Chungnam) ThermalBituminous85004,000 #1:’95.6, #2:’95.12, #3:’97.3, #4:’97.8 #5:’01.10, #6:’02.5, #7:’07.2, #8:’07.8 Solar-10.1 ’05.8 Hydraulic ’07.9 Pyeongtaek (Gyeonggi) ThermalBC Oil43501,400#1:’80.4, #2:’80.6, #3:’83.5, #4:’83.8 Combined Cycle LNG GT:’92.6 ST:’94.6 Seoincheon (Incheon) Combined Cycle LNG , GT:’92.6 ST:’92.11 Samrangjin (Gyeongnam) Pumped storage #1:’85.11, #2:’85.12 Solar-22 / 13#1:’07.9, #2:’08.4 Cheongsong (Gyeongbuk) Pumped Storage #1:’06.9, #2:’06.12 Total448,885.3  KOWEPO operates 44 generation units with total generation capacity of 8,885.3MW in 5 different sites

5 Rating Review Presentation to Standard & Poor’s PlantType Generation capacity (MW) Expected completion of Construction Remarks Under Construction GunsanCombined Cycle718May New Plants Taean IGCC (Integrated Gasification Combined Cycle) 300Oct Equity Investments GarorimTidal Power520Dec 2012  Consortium with Posco E&C, Daewoo E&C, Lotte E&C  Project financing  KOWEPO to be in charge of operation and maintenance GodeokCombined Cycle700June 2011  Consortium with SK E&S  Project financing  KOWEPO to be in charge of operation and maintenance YangjuCombined Cycle1,500Dec 2013  Consortium with Daelim Industry  Project financing  KOWEPO to be in charge of operation and maintenance  KOWEPO plans to maintain its leading market position and superior operating performance promoting growth with new plant constructions Strategy – Develop Growth Engine

6 Rating Review Presentation to Standard & Poor’s Strategy – Diversify Revenue Sources PlantType Generation capacity (MW) Remarks New Business Cheongra & Gimpo District Community Energy 923Gcal/h  Consortium with Lotte E&C, Incheon City Gas, Kenertec  Project financing  Expected to complete the construction in 2014 Overseas Project PhilippinesHybrid30  Consortium with Philippines CPD, Iljin Electricity  BOOT (Build, Own, Operate, Transfer) / Project financing  KOWEPO to be in charge of operation and maintenance Indonesia Thermal Power 400  Consortium with Hanwha and BK Global / Project financing  BOOT (Build, Own, Operate, Transfer)  MOU agreement with the government of Sumatra  KOWEPO to be in charge of operation and maintenance Laos Hydroelectric Power 390  Consortium with SK E&C  BOOT (Build, Own, Operate, Transfer) / Project financing  MOU agreement with the government of Laos  KOWEPO to be in charge of operation and maintenance Nigeria Thermal Power 1,320  Consortium with KEPCO/ERL  KOWEPO to be in charge of operation and maintenance  KOWEPO will diversify its revenue sources by investing in new business and overseas projects

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

8 Rating Review Presentation to Standard & Poor’s  Introduction of vesting contracts for gencos was deferred  Wholesale competition was put on a hold  MOCIE announced restructuring plan for power industry  Incorporation of generation companies  Cost-based pool bidding (“CBP”) mechanism  Initiation of KOSEP privatization  Plan to separate KEPCO’s distribution sector was halted due to substantial risk and uncertain benefits from the separation plan  IPO of KOSEP was delayed  Implementation of TWBP was suspended Power Industry Restructuring Process Cancellation of GENCOS Privatization Plan  Privatization plan for KEPCO and its Gencos was cancelled in July 2008  Public Hearing for Electricity Industry Advancement Plan will be held in a near future and the plans are underway to create a more conducive environment for Gencos The power industry restructuring plan has been delayed and the former privatization plan for Gencos has been cancelled  Privatization plan for Gencos cancelled

9 Rating Review Presentation to Standard & Poor’s Revision on CBP (‘Cost-Based Pool’) Market Revised CBP Market The Adjusted Coefficient of SMP Previous CBP Market Financial Distortion among KEPCO & Gencos Issues  Sudden price hike in both energy & electricity market Int’l oil price: US$85/bbl (Dec ‘ 07)  US$105/bbl (Current) Electricity price: KRW99.78/kWh (Dec ‘07)  KRW112.00/kWh (Current)  Significant financial disparity among Gencos  CBP (Cost-Based Pool) system has been continuously revised to reduce the cost related to power generation and to secure adequate reserves  In May 2008, the Government implemented a revised CBP market by introducing a “The Adjusted Coefficient of SMP” in order to mitigate the impact on financial distortion among Gencos Solution  Introduction of a “The Adjusted Coefficient of SMP” reduce the profit recognized from intermediate / peak load generators Enhance the profit generated from base load generators  Alleviate the financial disequilibrium among Gencos provoked from using different electricity sources

10 Rating Review Presentation to Standard & Poor’s “The Adjusted Coefficient of SMP”  Power Price Comparison Price typeOld PriceNew PriceRemarks Capacity Payment (CP) Base Load KRW 7.46/kWh  KRW 7.46/kWh as a base price, CP is differentiated by regions, by seasons and by hours Non Base Load Energy Price Base LoadMin (SMP, RMP) [Max {(SMP-Fuel Cost), 0} x The Adjusted Coefficient + Fuel Cost]  The Adjusted Coefficient -Nuclear : Coal : Domestic Coal : Others : Non Base Load SMP  Application of The Adjusted Coefficient of SMP (May 1, ’08) Abolition of Regulated Market Price (RMP) system KOWEPO can pass through 100% of its fuel cost through the electricity price Electricity Generation Cost Evaluation Committee annually determines The Adjusted Coefficient. However in times of major outbreaks The Adjusted Coefficient can be revised on a quarterly basis. ※ RMP : Regulated Market Price

11 Rating Review Presentation to Standard & Poor’s Impact on KOWEPO’s Performance  The new price structure will not have a significant impact on KOWEPO’s revenue structure  Revenue will increase after The Adjusted Coefficient of SMP. However the net profit is expected to slightly decline compared to the previous system  Expected Financial Impact among Gencos * : Impact on Net Income Source: KEPCO’s forecasts (April 2008) Introduction of “ The Adjusted Coefficient of SMP” will motivate Gencos to procure the fuel with lower prices and lead to fair competition among Gencos. It will increase the efficiency of the power market by stimulating cost reduction

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

13 Rating Review Presentation to Standard & Poor’s KOWEPO’s Market Position Sales Volume Market Share (1H 2008)Generation Capacity Market Share (1H 2008) Total Generation Capacity 70,353 MW Total Electricity Sales 194,506 GWh (MW) (GWh)

14 Rating Review Presentation to Standard & Poor’s Operational Efficiency  Thermal efficiency and utilization rate have been relatively stable over the years  The decline in utilization rate in 1H 2008 is mainly owing to the oil price hike which in turn resulted a downturn of utilization rate of Pyeongtaek power plant Utilization RateThermal Efficiency

15 Rating Review Presentation to Standard & Poor’s Long-Term Supply Contracts  KOWEPO enters into long-term supply contracts : – To assure an adequate supply of the raw materials for a streamlined operation – KOWEPO will adjust the portion of long- term supply contracts according to the market price volatility Bituminous Coal Contracts Bituminous SupplierCountry Contract Amount (1,000 ton/year) Terms XstrataAustralia1,300‘01.04 ~ ‘09.12 PeabodyAustralia500‘05.01 ~ ‘10.12 CentennialAustralia500‘04.07 ~ ‘10.06 Resource PacificAustralia250‘07.01 ~ ‘09.12 FlameAustralia500‘07.01 ~ ‘09.12 ECM (LT)Australia625‘07.01 ~ ‘09.12 ECM (ST)Australia375‘08.05 ~ ‘11.04 SONOMAAustralia750‘08.02 ~ ‘14.04 Australia: Sub-total 4,800 (35.0%) SCIEGCChina1,000‘99.04 ~ ‘09.03 CCIECChina500‘96.01 ~ ‘09.03 MinmetalsChina500‘96.04 ~ ‘09.03 SHENHUAChina960‘01.07 ~ ‘09.03 China: Sub-total 2,960 (21.6%) IndomincoIndonesia1,000‘03.10 ~ ‘09.12 ABKIndonesia720‘04.10 ~ ‘10.12 Tanito HarumIndonesia500‘05.01 ~ ‘10.12 PeabodyIndonesia325‘06.04 ~ ‘09.03 ECM (LT)Indonesia300‘06.04 ~ ‘09.03 STXIndonesia240‘07.10 ~ ‘08.09 GLENCOREIndonesia420‘07.10 ~ ‘08.09 INDOCOALIndonesia500‘08.01 ~ ‘08.09 Indonesia: Sub-total 4,005 (29.2%) KuzbassRussia 300 ‘06.04 ~ ‘09.03 SUEKRussia 240’07.10 ~ ’08.09 GLENCORERussia390’07.10 ~ ’08.09 Russia: Sub-total 930 (6.8%) GLENCORECanada250‘08.01 ~ ‘08.12 Canada: Sub-total 250(1.8%) TOTALSouth Africa250‘08.01 ~ ‘08.12 BHPSouth Africa250‘08.01 ~ ‘08.12 VITOLSouth Africa260‘08.01 ~ ‘08.12 S.Africa: Sub-total 760(5.6%) TOTAL13,705(100%) LNGSupplierContract amount (1,000 ton/year) Terms LNGKOGAS1.490’07~’26 (20 year)

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

17 Rating Review Presentation to Standard & Poor’s Capital Structure (1H 2008) Capital StructureAssetsAssets  KRW 3,750 billion – Non-Current Assets/Total Assets Ratio : 86.4%  KRW 3,750 billion – Non-Current Assets/Total Assets Ratio : 86.4% LiabilityLiability  KRW 1,378 billion – Debt/Capital Ratio : 28.4%  KRW 1,378 billion – Debt/Capital Ratio : 28.4% Shareholde rs’ Equity  KRW 2,372 billion – Stake is wholly owned by KEPCO  KRW 2,372 billion – Stake is wholly owned by KEPCO RevenueRevenue  KRW 1,702 billion EBITDAEBITDA  KRW 214 billion – Net Income : KRW 14 billion  KRW 214 billion – Net Income : KRW 14 billion

18 Rating Review Presentation to Standard & Poor’s Financial Performance  Sales revenue has shown a continuous growth rate  EBITDA has been stable but we have seen a decline in 1H 2008 resulting from the surge in raw material costs EBITDARevenue

19 Rating Review Presentation to Standard & Poor’s Healthy Coverage and Leverage Ratio  Coverage ratios have been stable and relatively strong – The deterioration of the coverage ratio in 1H 2008 is the consequence from a sharp increase in a raw material costs  Leverage ratio is preserved at a stable position LeverageCoverage

20 Rating Review Presentation to Standard & Poor’s Peer Comparison (FY2007) RevenueEBITDANet Income EBITDA MarginROELeverage

21 Rating Review Presentation to Standard & Poor’s Financial Forecast (1) Revenue & Operating Expense Forecasts

22 Rating Review Presentation to Standard & Poor’s  Profitability is expected to show a sharp decline this year compared to 2007 owing to the significant increase in the fuel costs. Our profitability moves in line with the price adjusted by KEPCO.  With lowered debts and stronger cash flow, KOWEPO expects leverage to fall gradually LeverageProfitability Financial Forecast (2)

23 Rating Review Presentation to Standard & Poor’s Capital Expenditure Capital Expenditure Schedule Gunsan Combined CycleTaean IGCCFacility ImprovementEquity Investment/Others

24 Rating Review Presentation to Standard & Poor’s Debt Profile and Strategy  KOWEPO prefers long-term funding of at least 5 years as the plant construction usually takes mid to long term period 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 (1H ‘08)Currency Distribution (1H ‘08)Debt Repayment Total Debt Profile : KRW billion 189.4

25 Rating Review Presentation to Standard & Poor’s Risk Management and Hedging Strategy  KOWEPO introduced risk management in five areas – finance, fuel, electricity bidding, generation and construction – Risk management committee was established in November 2003 to oversee the risk management initiatives – The committee meets every quarter to discuss key issues and to make decisions on the topics discussed  Finance – Foreign currency risk management committee establishes hedge plan, determine hedging ratio and review performance of the hedging tools – Credit line includes; KRW84bn and US$15mn from KEB, Woori and NACF (KRW100bn each) and US$60mn from BNP Paribas Total US$386mn of credit line via Letter of Credit from several banks  Fuel  Electricity bidding system: KOWEPO has implemented a market simulator called “Plexos” which enables KOWEPO to predict market price and optimally place its bid into the power pool  Generation and construction – Plants under operation are covered by package insurance policy based on repurchase prices (market prices) which amount to around KRW 4,629.7 billion – As for the plants under construction, all of the risks relating to construction are covered by insurance, which amount to around KRW 161 billion BituminousBituminous  Enlarging long-term contracts (more than 3 years) to secure stable supply of coal in the sellers’ market  Entered joint capital investment in bituminous mines with other gencos  Enlarging long-term contracts (more than 3 years) to secure stable supply of coal in the sellers’ market  Entered joint capital investment in bituminous mines with other gencos Fuel oils  Increase the stability and efficiency of oil purchase through domestic/international bidding LNGLNG  Plan to participate direct gas import if the government deregulates the market

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

27 Rating Review Presentation to Standard & Poor’s Concluding Remarks  Electricity demand is expected to show a continuous increase supported by a stable economic growth  Cancellation of the privatization of Gencos will further solidify the ties among the Government, KEPCO and KOWEPO  CBP system will ensure stable profitability and cash flow generation for Gencos  Robust capital structure and strong financial flexibility to support the capex plan  The implementation of project financing will help KOWEPO to minimize the financial burden and to stabilize the revenue structure for on-off shore business

Additional Information for S&P Korea Western Power Co., Ltd.

29 Rating Review Presentation to Standard & Poor’s Key Assumptions 2008(E)2009(E)2010(E)2011(E) Inflation Domestic3.00% International2.00% Average Exchange Rate for Year (KRW/USD) 1,030 Oil Price (US$/Barrel)90.0 Gross Generation (GWh)46,83148,83852,67653,305

30 Rating Review Presentation to Standard & Poor’s Projection In KRW billion unless otherwise stated2008(E)2009(E)2010(E)2011(E) Balance Sheet Current assets Non-Current Assets3,456.43,457.33,358.13,315.1 Total Assets4,063.24,126.54,107.54,120.4 Current Liabilities Long Term Liabilities1, Total Liabilities1,635.91,638.81,533.71,438.6 Capital Stock176.0 Capital Surplus1,266.6 Retained Earnings984.61,045.11,131.11,239.2 Total Stockholders Equity2,427.22,487.72,573.72,681.8 Liabilities and Equity4,063.24,126.54,107.54,120.4 Income Statement Sales3,486.83,848.04,490.94,664.7 Cost of Sales3,382.23,703.74,287.44,453.5 Operating Income (or Loss) Non-Operating Income Non-Operating Expense Income Before Tax Tax Expense Net Income (or Net Loss) Cash Flow Statement Operating activities (1) Net income Expense not involving cash payment Depreciation(378.1)(371.7)(407.2)(371.7) Others Investing activities (2) Financing activities (3) Cash Balance, Beginning of Year Cash Balance, End of Year