'KHNP must apologize and guarantee review deadline'

'Cost risk transfer causing capital market turmoil'

Negotiations between Korea Hydro & Nuclear Power and the Daewoo Engineering & Construction–Doosan Enerbility consortium over the construction contract for the Czech Dukovany nuclear power plant collapsed Thursday after prolonged difficulties. Industry observers have questioned whether it is appropriate to replace a key contractor that has worked with Team Korea for eight years by leveraging a position of dominance. Shown is an aerial view of the Dukovany site in the Czech Republic, the planned location for the new nuclear power plant. [Korea Hydro & Nuclear Power]
Negotiations between Korea Hydro & Nuclear Power and the Daewoo Engineering & Construction–Doosan Enerbility consortium over the construction contract for the Czech Dukovany nuclear power plant collapsed Thursday after prolonged difficulties. Industry observers have questioned whether it is appropriate to replace a key contractor that has worked with Team Korea for eight years by leveraging a position of dominance. Shown is an aerial view of the Dukovany site in the Czech Republic, the planned location for the new nuclear power plant. [Korea Hydro & Nuclear Power]

The union at Daewoo Engineering & Construction has called on Korea Hydro & Nuclear Power to return to the negotiating table after KHNP announced the collapse of contract talks for the Dukovany nuclear power plant project in the Czech Republic.

The Daewoo E&C chapter of the National Construction Industry Workers' Union issued a statement Friday, saying that "KHNP's bureaucratic unilateralism — leveraging its status as a public enterprise to shift construction cost risks onto the private sector — is undermining the trust and mutual-benefit principles of Team Korea."

KHNP announced Thursday that it had ended contract negotiations with the Daewoo E&C–Doosan Enerbility consortium for the Dukovany project. The two sides were unable to narrow their differences over cost settlement methods and risk-sharing structures.

According to the union, KHNP demanded a lump-sum contract based on the basic design and a recalculation of unit costs, citing the need to stay within budget limits. The contractor consortium argued that, given the characteristics of the APR1000 reactor — being applied commercially for the first time in the world — the contract should allow for settlement of actual quantity increases after the detailed design is finalized, and that appropriate cost recovery must be guaranteed.

After KHNP presented revised contract terms earlier this month, the contractors requested an extension of the negotiation deadline to the end of December. KHNP, however, unilaterally declared the talks over roughly three weeks later and disclosed the breakdown to the media.

The union also criticized KHNP's surprise announcement for causing turmoil in capital markets, including a sharp drop in the company's share price. The union said fixed costs and margin pressures had accumulated during the project — including from the settlement of intellectual property disputes — and that KHNP had sought to pass those costs onto the private contractors through changes to the construction contract terms.

The union demanded an apology from KHNP and urged it to guarantee the review deadline requested by the contractor consortium — the end of December — and to agree to renegotiate.

The Dukovany project involves the construction of two APR1000 reactors, with a total project cost of 422 billion Czech koruna (about 26 trillion won, or $19.5 billion). KHNP has said it plans to hold a briefing for prospective contractors in January, issue a tender notice in April and sign a contract with a new contractor in July next year.


lucky@heraldcorp.com