Korean investment to the U.S. delayed after U.S. demand to hand over the site to Trump-designated SPV

The reason South Korea and the United States have been unable to announce the Encinal combined-cycle gas power plant in Texas as the first project under their $350 billion U.S. investment initiative, despite having effectively selected it, has been found to involve disagreements over ownership of individual projects. The South Korea-U.S. memorandum of understanding (MOU) stipulates that project-specific special purpose vehicles (SPVs), which would hold individual projects such as power plants, must be wholly owned by the United States. However, the two sides differ over whether the U.S.-based subsidiaries of South Korean companies can qualify as U.S. owners. South Korea’s negotiating team, including the presidential office and the Ministry of Trade, Industry and Energy, is engaged in final-stage negotiations ahead of an expected announcement of the first project next month.
Under the MOU signed last November, the United States will establish an umbrella investment SPV to manage $200 billion worth of projects, with the United States or a U.S.-designated entity managing and controlling it as the general partner (GP). South Korea will provide funding to the investment SPV. Regarding the project SPVs established beneath it, an annex to the MOU defines them as “separate special purpose vehicles wholly owned by the United States.”
The key issue is how the term “United States” should be interpreted. The U.S. side reportedly maintains that the U.S. government or a U.S. entity designated by it must directly own the equity stakes in the projects. South Korea, by contrast, argues that U.S. subsidiaries established by South Korean companies should also be permitted to hold equity because they are corporations incorporated under U.S. law.
Under the U.S. interpretation, South Korea could provide enormous amounts of capital without becoming a shareholder in the power plant. The U.S. side could retain control over major decisions involving operations, expansion, and eventual sale, while South Korean companies could be limited to construction, equipment supply, or contracted operations. Conversely, if U.S.-based subsidiaries of South Korean companies are allowed to acquire equity stakes, they could participate on the board and exercise voting rights while also receiving long-term operating profits and gains from increases in the asset’s value. The definition of “U.S. ownership” established for this first project is expected to potentially serve as a precedent for subsequent projects involving nuclear power, energy, semiconductors, and other sectors.
Nils Wollesen Osterberg, a research fellow at the Korea Economic Institute of America (KEI), recently noted in a report that “the MOU explicitly states that investment projects will be owned by the United States, but does not specify whether ownership will be private or public, nor does it define what ownership means.” He suggested that differing interpretations of “U.S. ownership” may be one of the factors delaying the announcement of the investment.