Reuters quoted sources at KEPCO and other utilities said Korea Electric Power Corp has chosen Germany's RWE AG as the preferred bidder for its first overseas trading joint venture mainly to procure raw materials.

The sources who declined to be identified as they were not authorised to talk to media that KEPCO aims to set up the joint venture in Asia, likely Singapore, within the first half of next year.

A KEPCO spokesperson who was reached by Reuters confirmed the report later in the day.

South Korea, Asia fourth largest economy that is heavily dependent on energy imports has been seeking ways to efficiently secure commodities and energy as global prices soar. It imports almost all its feedstock for power generation.

One source at the state-run utility in the world's No.3 coal buyer said that "The joint venture is to ensure stable supplies of fuel for power generation as we import most resources. We plan to start with coal, and later uranium, and possibly expand to trade gas in the long-term."

The source said "We want to import resources at competitive prices via direct procurement from mines while hedging against any price volatility, noting for instance the unstable coal supply and price volatility triggered by Australia's flood early this year.”

KEPCO and industry sources said in February that the utility would set up its first coal trading firm overseas by the end of 2012 a move that could boost the spot market trading in Asia in the face of surging prices.

KEPCO and another state-run utility Korea Gas Corp have been struggling to be compensated for billions of dollars of losses incurred by costlier power generation.

(Sourced from Reuters)