KHNP: "We Didn't Unilaterally Demand Cuts... Contractor Overestimated Construction Costs"

"Czech Nuclear Plant": KHNP-Daewoo and Doosan Consortium Construction Contract Talks Collapse
KHNP: "Contractor Has Not Implemented Proposal to Resolve Disagreements Through a Third Party"
"We Will Promptly Select a New Contractor and Meet the Schedule"

The contractor has claimed that negotiations for the construction contract for the Dukovany Nuclear Power Plant in the Czech Republic broke down because Korea Hydro & Nuclear Power (KHNP) unilaterally demanded a reduction in construction costs. KHNP has rejected the claim, saying it sought an adjustment to costs that had been overestimated, based on the findings of an independent expert review, but the contractor refused to accept the adjustment.

On October 29, KHNP announced, "We are ending negotiations with the contractor on the construction contract for the Dukovany Nuclear Power Plant project." The two sides had negotiated for about 15 months but failed to bridge their differences over construction costs and contract terms.

A view of the Dukovany Nuclear Power Plant.

KHNP stressed that it was not true that it had unilaterally demanded a reduction in the contract amount from the contractor. A KHNP official said, "The contractor claims that KHNP unilaterally demanded reductions in the construction contract amount and unit prices, as well as additional work. These were not unilateral cuts, but reasonable requests for adjustments based on the agreement reached by both companies during the initial bidding process and the findings of an independent expert review, which found that the costs had been overestimated." The official added, "Instead, the contractor has not implemented the optimization of quantities and unit prices it proposed in its own project development plan, or its proposal to resolve disagreements through a third-party organization."

KHNP also rejected the claim that it had gone against global standards by insisting on a lump-sum contract rather than settling costs based on actual quantities. KHNP said, "The contract type is determined based on the characteristics of the project, the allocation of risks, and the client's contract requirements. There is no global standard in international construction contracts requiring one particular contract type to be applied uniformly." It added, "For the Czech project, KHNP and the Team Korea consortium members mutually agreed to proceed with a lump-sum contract, and the main contract with the client was therefore concluded on that basis."

KHNP dismissed concerns that the breakdown in negotiations could delay the project and damage relations with the Czech government. A KHNP official said, "We plan to meet the schedule for site preparation in January 2028 by promptly selecting a new contractor." The official added, "The client is concerned about delays to the construction contract and wants the project schedule to be met, so we will maintain our relationship of trust with the Czech side by promptly concluding negotiations and proceeding with the subsequent steps."

Regarding the possibility of disputes, including higher project costs and lawsuits with the construction consortium, KHNP said, "Replacing the contractor may result in some additional costs, but selecting a competitive new contractor could also reduce project costs." It added, "We will compensate for the construction work already completed in accordance with established procedures and work with legal experts to respond if any related legal disputes arise."

This content was produced with the assistance of AI translation services.