North Korea, which is suffering major blackouts, refused Thursday to let experts from the South inspect its power plants so Seoul can decide whether to supply free electricity, reports said.
Separate military negotiations at the border village of Panmunjom were also held to work out guidelines to rebuild a railroad and highway across the heavily fortified frontier.
The South insisted at the electricity talks in Pyongyang that experts from both sides should conduct an extensive survey of generation and transmission facilities at three major North Korean power plants, pooled South Korean media reports said.
South Korean negotiators stressed the survey was needed to assess the extent of North Korea's energy crisis.
But North Korea insisted that the survey should be limited to technical matters related to the transmission of electricity.
The North repeated a request that South Korea provide 500,000 kilowatts of free electricity. Much of North Korea is plunged into long hours of darkness without heating, which aid workers have said worsens its food crisis.
Foreign visitors have said that even hospitals and orphanages go without power and many areas are like "ghost towns" after dark.
The South has agreed to help ease the North's energy crisis but not to give free power.
Seoul has said it needs "a national consensus" for a such a decision, which would require massive financing and the building of transmission facilities.
South Korean delegation chief Yoo Chang-Moo called for "mutual understanding and concessions" to narrow differences.
North Korean counterpart O Kwang-Hung said: "This is the first concrete discussion on economic cooperation. I believe an accord on economic cooperation between the two Koreas is now at a state of implementation."
The Stalinist North has been hit hard by energy and food shortages since the collapse of the communist bloc and a wave of natural disasters.
The South is also recovering from the 1997-98 financial crisis and is struggling to rid itself of vast corporate debts.
While North Korea has sought to put the emphasis of the inter-Korean thaw on economic cooperation, South Korean President Kim Dae-Jung is under pressure to secure concessions on family reunions and easing military tensions before releasing aid.
An historic summit between President Kim and North Korean leader Kim Jong-Il has been followed by economic and military meetings and talks on reuniting relatives separated since the 1945 division of Korea.
The two sides have already agreed to rebuild a railway and a highway across their border, to reconnect Seoul and Pyongyang.
The talks at Panmunjom were to agree on how soldiers on both sides would clear a corridor through the four kilometer-wide (2.5 mile) border, which is littered with thousands of landmines, concrete bunkers and guard posts -- SEOUL (AFP)
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