Rating Review Presentation to Standard & Poor’s Rating Review Presentation to Standard & Poor’s 29 June 2006 Korea Western Power Co., Ltd.

2 KOWEPO’s Credit Strengths High correlation between electricity demand growth and Korean GDP growth Cost Based Pool System expected to continue Six Gencos account for over 90% of Korean power consumption Stable revenue and cash flows Strong debt servicing ability Solid capital structure to support capital expenditure Credit profile benefits from the expected additional capacity as required by the Power Supply and Demand Plan Diversified and secured sources of key raw materials Highly sophisticated and experienced management Prospering Economy & Solid Sovereign Credit Favorable Industry Conditions & Regulatory Environment Strong Operations & Experienced Management Solid Financials & Robust Capital Structure Strong outlook for GDP growth Outstanding external liquidity position, dynamic & diverse export sectors Sound financial markets & improving financial sector Positive credit rating momentum

3 Strong Mitigating Factors to Credit Concerns Capex requirement to fund capacity expansion Strong debt servicing ability due to stable, recurring revenue and cash flows Strong balance sheet to support business expansion Increasing revenue led by stable growth of electricity demand Business risk under the deregulation plan Delayed privatization plan of Gencos Performance expected to be further enhanced once new generating units at Cheongsong and Taean become operational in Dec 2006 and 2007/2008 respectively KOWEPO is one of the best performers among Korean thermal Gencos Ability to fully pass fuel cost to KEPCO under the current Cost Based Pool system (“CBP”) CBP is expected to remain unchanged as MOCIE halted the distribution sector’s separation plan and suspended the implementation of Two-Way Bidding Pool system (“TWBP”) Exposure to high raw material costs Good operating track record of power plants with low historical incidents and diligent plant maintenance Continuing investment to improve reliability of generation facilities Exposure to potential generation unit breakdown

4 1.Company Overview 2.Regulatory Environment 3.Operations 4.Financial Management 5.Concluding Remarks

5 Introduction to KOWEPO Inception Spun off from KEPCO in April 2, 2001 Credit Ratings A- (stable) / A1 (stable) vs. Korea sovereign A (stable) / A3 (positive) Generation Capacity 8,880 MW (Operation: 7,280 MW, Construction: 1,600 MW) Total Assets 2006 Q1: KRW 3,365 bn (USD 3.45 bn) 2005: KRW 3,262 bn (USD 3.22 bn) Ownership 100% owned by KEPCO (54% owned by Korean Gov’t) Total Revenue 2006 Q1: KRW 680 bn (USD 0.7 bn) 2005: KRW 2,227 bn (USD 2.20 bn) Net Income 2006 Q1: KRW 79.7 bn (USD 82 mn) 2005: KRW bn (USD mn) (KRW/USD FX rate : as of 31 st Mar. 2006, as of 31st Dec. 2005)

6 Strategy – Maintain Market Position KOWEPO plans to maintain its leading market position and superior operating performance promoting growth with new plant constructions PlantTypeGeneration capacity (MW)Construction PeriodConstruction Cost* Under Construction Cheongsong #1,2Pumped Storage600Sep 2000 to Dec Taean #7,8Thermal1,000Nov 2003 to Mar 20081,090 New Plants Gunsan**Combined Cycle700Jun 2007 to Nov TaeanClean Coal Technology300Oct 2009 to Sep * KRW billion ** Not reflected in 2 nd Power Supply and Demand Plan by MOCIE

7 Strategy – Diversify Revenue Sources KOWEPO will diversify its revenue sources by investing in new business, overseas project, and new or renewable energy PlantTypeCapacityRemarks New Business Cheongra (Incheon) District Cooling & Heating -  Plan to use Seoincheon C/C’s steam and waste heat  Consortium with Lotte Engineering &Construction and Incheon City Gas  Construction period: January 2006 to December 2012  Total investment: approx. KRW 162 billion (KOWEPO: KRW 11 billion) Overseas Project LaosHydro Power339 MW  Initial stage: formed a consortium with SK Engineering & Construction  BOOT (Build, Own, Operate, Transfer)  Expected joint partners: KEPCO and SK Engineering & Construction  KOWEPO is expected to provide the maintenance, and manage the operations New/renewable Energy TaeanSolar120 kW  Completed the construction in August 2005 SamrangjinSolar3,000 kW  Plant to complete the construction in December 2008 Taean Small Hydro Power 2,200 kW  Plan to complete the construction by March 2007

8 1.Company Overview 2.Regulatory Environment 3.Operations 4.Financial Management 5.Concluding Remarks

9 Power Industry Restructuring Process The suspension of disco setup cleared the industry uncertainty considerablyThe suspension of disco setup cleared the industry uncertainty considerably Expected continued government efforts in the industry restructuring with a well-paced, gradual approachExpected continued government efforts in the industry restructuring with a well-paced, gradual approach MOCIE announced restructuring plan for power industry Incorporation of generation companies Cost-based pool bidding (“CBP”) mechanism Expiration of vesting contracts Retail competition Introduction of vesting contracts for gencos Spin off distribution sector from KEPCO Wholesale competition Initiation of KOSEP privatization Plan to separate KEPCO’s distribution sector was halted due to substantial risk and uncertain benefits from the separation plan Determined that discos will operate as independent divisions within KEPCO and these divisions will compete internally within KEPCO IPO of KOSEP was delayed until the offering price exceeds the book price. The timing of IPO is unforeseeable Implementation of TWBP was suspended HOLD The power industry restructuring plan has faced some obstacles, and the implementation of future plans has been suspended

10 Power Price Determination Power Demand Nuclear Coal Oil / LNG Base Load Price Base Load Price (Nuclear and Coal Power Plant): CP + BLMP Capacity PaymentBLMP CP includes construction cost and operation cost of standard coal fired power plants Fixed cost is reimbursed to Gencos by KEPCO regardless of their operation Non-Base Load If fuel price/kWh is at or above KRW Fuel costs incurred by each generators are fully compensated If fuel price/kWh is below KRW BLMP is set at the highest fuel cost among generators dispatched Capacity PaymentSMP CP includes construction cost and operation cost of peak-load power plants Fixed cost is reimbursed to Gencos by KEPCO regardless of the operation SMP is set at the highest fuel cost among generators dispatched Non-Base Load Price (LNG, Oil, Hydro Power): CP + SMP Prices are determined according to the type of markets – base load and non-base load To mitigate financial imbalance caused by oil price hikes between KEPCO and Gencos, the 5th Cost Assessment Committee decided to lower CP of base load units on 29 May 2006 CP for base load units will be reduced from KRW20.49/kWh to KRW13.22/kWh from June to August 2006, after which the Committee will analyze the effects and review whether to continue the adjustments. The CP adjustments will only be effective until the end of 2006 at the latest.

11 CBP Market Improvements Korean Government is continuously working towards further improvements of the CBP market process. It requested Korea Development Institute to prepare for a CBP market improvement plan. The result was announced in February 2006 CBP market improvement plan will be implemented starting from 2007 to 2008 in phases As CBP system continues, gencos are expected to continue to generate stable profit and cash flowAs CBP system continues, gencos are expected to continue to generate stable profit and cash flow After the introduction of CBP market improvement plan, profitability is expected to remain at similar levelsAfter the introduction of CBP market improvement plan, profitability is expected to remain at similar levels Unification of Double MarketRegional Price Differentiation Price Differentiation by Seasons and by Reserve Margin Unify currently split electricity market (base load and non-base load) into a single market To solve profit imbalance between KEPCO and Gencos, it is expected to introduce CfD (Contract for Difference) Differentiate prices among power generators based on the demand concentration of the location Generators that are close to metropolitan region are more beneficial Differentiate CP based on high demand periods and normal periods Such differentiation allows the procurement of supply capacity during peak periods of demand

12 1.Company Overview 2.Regulatory Environment 3.Operations 4.Financial Management 5.Concluding Remarks

13 Operation Overview Base load, intermediate load, and peak load account for 41%, 19% and 40% respectively in terms of generation capacity 90% of capacity is located in or near the Seoul and Gyeonggi metropolitan areas  Seoul and Gyeonggi metropolitan areas comprises approx. 40% of total national demand Generation Capacity by Type of Plant (1Q 2006) Location of Plant Complex Pyeongtaek C/C (480 MW) Seoincheon C/C (1,800 MW) Samrangjin P/S (600 MW) Cheongsong P/S (600 MW) 3,480MW Pyeongtaek T/P (1,400 MW) 1,400MW Taean T/P (3,000 MW) 4,000MW Taean T/P (1,000 MW) ,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Base LoadIntermediate LoadPeak Load In OperationUnder Construction Note: T/P denotes “Thermal Power Plant”, C/C denotes “Combined Cycle”, P/S denotes “Pumped Storage”

14 KOWEPO’s Market Position Generation Capacity Market Share (1Q 2006)Sales Volume Market Share (1Q 2006) (MW) (GWh) Total Generation Capacity 63,003 MW Total Electricity Sales 90,755 GWh (12.3%) (29.0%) (11.4%) (11.6%) (12.7%) (11.0%) (12.0%)(14.1%) (12.4%) (37.7%) (1.7%) (12.0%) (11.5%) (10.7%)

15 Strong Operational Efficiency Thermal efficiency and utilization rate have been relatively stable over the years. Thermal EfficiencyUtilization Rate % %

16 Cost Saving Measures Remarkable Cost Cutting Initiatives Seoincheon Pyeongtaek  Completed all units of Gas Turbines uprate in April 2006  Improvements -Thermal efficiency: 3% -Combined generation capacity: 10% -NOx emission level reduction: 75%  Approximate annual saving of KRW 2.9 billion per turbine  Completed Desulfurization facility installment on February Purchased cheaper high sulfur oil (2.59%) rather than low sulfur oil (0.3%) -Increased utilization rate from 28.1% in 2004 to 44.8% in 2005  Fuel cost of saving of approximately KRW 27 billion per year

17 1.Company Overview 2.Regulatory Environment 3.Operations 4.Financial Management 5.Concluding Remarks

18 Capital Structure (1Q 2006) Assets  KRW 3,365 billion –Fixed Assets/Total Assets Ratio : 89.6%  KRW 1,144 billion –Liability-to-Equity Ratio : 51.5%  KRW 2,221 billion –Stake is Wholly Owned by KEPCO  EBIT : KRW billion -Net Income : KRW 79.7 billion Liabilities Shareholders’ Equity Profitability  KRW 680 billion Revenue Capital Structure KRW billion

19 Financial Performance KOWEPO achieved robust performance in 1Q 2006 with revenue of KRW 680 billion and net income of KRW 79.7 billion despite high fuel costs KOWEPO’s revenue has shown a stable performance Net Income in 2004 and 2005 were lower than in 2003 mainly due to:  In case of Taean T/P, it does not create margins in BLMP due to fuel price hikes from 2004 Revenue KRW billion Net Income KRW billion

20 Reduced Interest Expense and Leverage Leverage Coverage Times Coverage ratios have been increased significantly due to KOWEPO’s proactive debt restructuring activities including early redemptions of existing high interest rate debts and lowering funding rate Leverage ratios have decreased since our inception in 2001, but have started to increase slightly due to the expansion of our capacity at our Taean Plant, which is expected to peak this year %

21 KRW billion Strong Competitive Position (FY 2005) Revenue EBIT Net Income KRW billion EBIT MarginEBITDA Int. Coverage Leverage Times % %

22 Financial Forecast Revenue & Operating Cost Forecasts KRW billion

23 Ratio Analysis Profitability Profitability would increase in 2008 after the completion of Taean Plant #7 by 2007 and #8 by 2008 With lowered debts and strong cash flow, KOWEPO expects the leverage to fall gradually Leverage % EBITDA margin EBIT margin ROA

24 Debt RepaymentCurrency Distribution (1Q 2006)Type of Instrument (1Q 2006) 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 from the domestic capital market and the remaining from the international markets. 82% of KOWEPO’s debts carry fixed interest rate, while 18% are in floating rate All of our debts unsecured and our debt maturity profile evenly distributed Total Debt Profile : KRW billion Debt Profile and Strategy KRW billion

25 Capex and Funding Capital Expenditure Schedule KRW billion

26 Risk Management and Hedging Strategy KOWEPO introduced risk management in four areas – finance, fuel, electricity bidding, and generation facilities  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 oversees the risk management on foreign currency debt  The committee meets every quarter to establish foreign currency risk management planning, fix hedging ratio for foreign currency risk, and review performance the hedging tools 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 facilities  Plants under operation are covered by package insurance based on repurchase prices (market price) which amount to around KRW 3,400 billion.  As for the plants under construction, all the risks relating to construction are covered by erection all risks insurance which amount to around KRW 780 billion. Bituminous –China and Australia: conducted pricing negotiations in coordination with other Gencos - Cost saving per ton (compared with an average cost of Japanese electric companies*) : US$ 2 for imported coal from China, US$1 for imported coal from Australia –Increased proportion of imported coal from Indonesia for diversification Fuel oils –Increase the stability and efficiency through domestic/international bidding –Shift to low cost BC oil by installment of Desulphurization facility in Pyeongtaek T/P LNG–Plan to participate direct gas import after 2010 if the government deregulates the market *Source: Tex Report, Argus Coal Information, 2005

27 1.Company Overview 2.Regulatory Environment 3.Operations 4.Financial Management 5.Concluding Remarks

28 Concluding Remarks FavourableIndustry Conditions & Strong Operations & Experienced Management Solid Financials & Robust Capital Structure Prospering Economy & Solid Sovereign Credit Regulatory Environment

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

30 Key Assumptions 2006(E)2007(E)2008(E)2009(E) Inflation Domestic2.7% International2.0% Average Exchange Rate for Year(KRW/USD)950 Oil Price (US$/Barrel) Korea GDP Growth (%)5.0% Gross Generation (GWh)39,07044,41345,43245,342 Power Sold (GWh)37,56342,64443,61542,660

31 Performance and Projection In KRW billion unless otherwise stated Balance Sheet2006(E)2007(E)2008(E)2009(E) Current assets Non-Current Assets3,201.33,177.73,300.03,158.9 Total Assets3,565.63,583.83,736.73,704.5 Current Liabilities Long Term Liabilities Total Liabilities1,220.11,111.11, Capital Stock176.0 Capital Surplus1,266.6 Retained Earnings902.81,030.11,176.11,329.4 Total Stockholders Equity2,345.42,472.72,618.72,772.0 Liabilities and Equity3,565.63,583.83,736.73,704.5 Income Statement2006(E)2007(E)2008(E)2009(E) Sales2,327.82,453.32,531.32,583.6 Cost of Sales2,053.42,189.32,237.42,280.5 Operating Income (or Loss) Non-Operating Income Non-Operating Expense Income Before Tax Tax Expense Net Income (or Net Loss) Cash Flow Statement2006(E)2007(E)2008(E)2009(E) Operating activities (1) Net income Expense not involving cash payment Depreciation Others Increase/Decrease in New Working Capital Investing activities (2) Financing activities (3) Cash Balance, Beginning of Year Cash Balance, End of Year

32 Long-Term Supply Contracts Bituminous SupplierCountry Contract Amount (1,000 ton/year) Terms BHP-Billiton -BayswaterAustralia 500 ‘ ‘ CentennialAustralia 500‘ ‘ 07.6 Xstrata-NCAAustralia1,100‘ ‘ 06.3* RIO Tinto – Blair AtholAustralia 500‘ ‘ 06.3* EnshamAustralia 500‘ ‘ PeabodyAustralia 240‘ ‘ Australia - Sub-total 3,340 (40%) SCIEGCChina1,000‘ ‘ 07.3 CCIECChina500’ ‘ 07.3 SHENHUAChina960‘ ‘ 07.6 MinmetalsChina360’06.5 – ’09.4 China - Sub-total 2,820 (34%) IndomincoIndonesia500‘ ‘ KidecoIndonesia300‘ ‘ ABKIndonesia200‘ ‘ Tanito HarumIndonesia200‘ ‘ PeabodyIndonesia325’06.5 – ’09.4 ECMIndonesia300’06.5 – ’09.4 Indonesia - Sub-total 1,825 (22%) KuzbassRussia300’06.4 – ’09.3 Russia - Sub-total 300(4%) 8,285 (100%) Fuel Oil TypeSupplierContract amountTerms B.C oil (Sulfa 2.5%)GS Caltex 119,300 ㎘ ‘ –12 Kerosene for boilerHyundai Oil Bank 10,126 ㎘ ‘ – 12 LNG Supplier Contract amount (1,000 ton/year) Terms LNGKOGAS1,408 ‘ 86 ～ ‘ 06 (20year) 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 Note: Long-Term Supply Contracts as of YE2005 * Under discussion regarding volume, price, and terms Bituminous Coal Contracts

33 Composition of Liquid Assets (1Q 2006) 347 (34%) Stored goods 667 (66%) Raw material 1,014 (100%)Inventory 302 (12%) Others* 66 (3%) Advance payments 55 (2%) Non trade receivables 2,034 (82%) Trade receivables 17 (1%) Cash & cash equiv. 2,474 (100%)Quick assets Amount (KRW 100mn)Assets Liquid Assets * others include accrued revenue, prepaid expenses, short-term lending, and other quick assets.