KHNP: "Dukovany Nuclear Plant Construction Contract Talks Collapse"; Contractors: "Unacceptable" (Comprehensive)

KHNP Announces End to Construction Contract Negotiations on the 29th
KHNP: "Contractor Overestimated Construction Costs... No Unilateral Demand for Cuts"
Consortium: "Revised Contract Includes Risks That Could Threaten Companies' Survival"

Negotiations on the construction contract for the Dukovany nuclear power plant project in the Czech Republic, undertaken by a consortium of Korea Hydro & Nuclear Power, Daewoo Engineering & Construction, and Doosan Enerbility, broke down on Thursday, October 29. The two sides differ over the reasons for the breakdown, raising the prospect of further disputes.

KHNP said Thursday, "We are ending negotiations with the construction companies on the construction contract for the Dukovany nuclear power plant project." The sides negotiated for about 15 months but failed to bridge their differences over construction costs and contract terms, among other issues.

A view of the Dukovany nuclear power plant.

KHNP stressed that it was untrue that it had unilaterally asked the construction companies to reduce the contract amount. A KHNP official said, "The construction companies claim that KHNP unilaterally demanded cuts to the construction contract amount and unit prices, as well as additional work. These were not unilateral cuts, but reasonable adjustment requests based on agreements reached by both companies during the initial bidding process and the findings of an external expert review, which found that costs had been overestimated." The official added, "Instead, the construction companies have failed to implement the proposals they themselves made in their project development plan to optimize quantities and unit prices, or their proposal to resolve differences through a third-party institution."

The construction companies, however, countered that "KHNP did not give them sufficient time to review the terms." The consortium claimed that KHNP presented revised contract terms earlier this month without explaining the specific reasons for the changes. It said it had asked for the negotiation deadline to be extended until the end of this year so it could thoroughly review the changes, but the prime contractor refused. A consortium official said, "The Czech new nuclear power plant project will be the first commercial application of the APR1000 model anywhere in the world, so construction costs, the construction period, and the scope of work must be finalized through thorough preparation and research in advance. But it was simply unrealistic to expect us to determine our final position and conclude negotiations within the short span of three weeks, without being given enough time to review the terms."

The two sides also disagreed over the contract structure. KHNP said, "The contract structure is determined by the nature of the project, the allocation of risks, and the client's contract requirements. There is no global standard in international construction contracts that uniformly requires a particular contract structure. For the Czech project, KHNP and the Team Korea consortium members mutually agreed to proceed with a lump-sum contract, and we concluded the main contract with the client on that basis." The construction companies countered, "It is not in line with global standards to require a construction-only consortium, which cannot participate in the basic or detailed design of the APR1000 model being built for the first time in the world, to absorb a high proportion of additional construction work resulting from design changes without any adjustment to the construction costs. The terms newly revised and presented by the prime contractor on the 7th contained risks that could threaten the survival of private companies, making a more detailed review and additional time necessary for the construction consortium." They added, "We again ask the prime contractor to resume amicable negotiations with the construction consortium, even now, in the broader interest of the country and for the sake of the national interest."

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

The possibility remains open for Daewoo Engineering & Construction and Doosan Enerbility to participate again as construction contractors. A KHNP official said, "We are at the planning stage for the contractor selection process and detailed criteria, and plan to select a contractor through competitive bidding in accordance with relevant laws. Taking into account relevant laws, project conditions, the ability to meet the schedule, and the ability to perform the contract, we will provide all qualified companies, including Daewoo Engineering & Construction and Doosan Enerbility, with a fair opportunity to participate and select a competitive contractor."

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