Fallout from Czech Nuclear Construction Contract Breakdown: Could It Put Additional Orders for Two Temelin Units at Risk?

Czech Government Expected to Decide on Additional Nuclear Plant Construction Next Year... Dukovany Performance Is Key
Government: "If We Lose Trust at Dukovany, We Lose Temelin Too"... Schedule Delays and Local Public Opinion Could Be Factors

Uncertainty is growing over additional orders for Units 3 and 4 of the Temelin Nuclear Power Plant after negotiations on the construction contract for the Dukovany nuclear power plant project in the Czech Republic between Korea Hydro & Nuclear Power (KHNP) and a consortium of Daewoo Engineering & Construction and Doosan Enerbility broke down. The Czech government has said it will take the progress of the Dukovany project into account when deciding whether to build new nuclear units at Temelin, making any delays caused by a change of construction contractor a potential factor in the competition for future orders.

According to the nuclear industry on Oct. 30, the Czech government is expected to decide next year whether to build new Units 3 and 4 at Temelin. In June last year, KHNP signed a main contract with Czech project owner EDU II to build Units 5 and 6 at Dukovany, securing an option to supply up to two additional units at Temelin.

The option is valid for five years. If exercised, the same Korean-designed APR1000 reactors used at Dukovany could be installed at Temelin Units 3 and 4. However, securing the option does not guarantee an additional order; the decision to proceed with construction and award a contract rests with the Czech government.

The issue is that the Czech government's decision on the Temelin project is linked to the performance of the Dukovany project. In April, Tomas Ehler, director of nuclear energy and new technologies at the Czech Ministry of Industry and Trade, said at a press briefing in Busan that a final decision on whether to build the Temelin plant could be made around next year, adding, "We will monitor the progress of the Dukovany project before making an overall assessment."

The Korean government also acknowledges that successful execution of the Dukovany project could be directly tied to securing additional orders at Temelin. At a background briefing on the Dukovany nuclear plant yesterday, Kim Chang-hee, director of nuclear power strategy planning at the Ministry of Industry and Trade, was asked whether the breakdown in negotiations could affect the chances of winning the Temelin contract. "The question is how we handle Dukovany Units 5 and 6," he said. "We are focused on Dukovany and doing our utmost to ensure it is built on schedule." He added, "If we lose trust at Dukovany, we will lose trust at Temelin as well. In the broader picture, it could have an impact, but that was not a factor in our decision to end the construction contract negotiations."

KHNP also views successful execution of the Dukovany project as a prerequisite for winning additional orders at Temelin. "I believe we should also win the project for the two future Temelin units," KHNP Business General Manager Kim Young-hoon said yesterday at the Korean Nuclear Society's fall meeting at the Gyeongju Hwabaek International Convention Center. "To do that, above all, we must carry out the Dukovany project we have already contracted for without disruption and according to the given schedule."

Public opinion in the Czech Republic and the response of European countries competing for nuclear power plant contracts have also emerged as potential factors following the breakdown of the Dukovany construction contract negotiations. At a background briefing yesterday, KHNP Senior Executive Vice President for Business Choi Il-kyung was asked about the potential repercussions in the Czech Republic. "There are roughly two things to consider. First, the Czech people and public opinion in the Czech Republic; second, public opinion within the EU," he said, directly referring to France, a competitor.

"The Czech government is well aware of the process of selecting a replacement construction contractor, and we respect that," Choi said. "The Czech government is aware of both domestic public opinion and issues involving competing countries, so we trust it will manage them well."

France's EDF competed against KHNP for the Dukovany project, and the comments suggest concern that the breakdown in construction contract negotiations could fuel debate over the ability of Korean companies to deliver nuclear power projects. However, so far, there has been no official indication that the Czech government intends to reconsider or cancel the option to supply additional units at Temelin because of the failed negotiations.

The immediate priority is to minimize delays to the Dukovany project schedule. KHNP plans to select a new construction contractor by July next year, but some work related to permits has already encountered difficulties. "Some delays have occurred in permit-related work that the construction consortium was supposed to carry out locally," Choi said. "We need to apply for a building permit by July next year, and the related work has been affected and is not progressing well."

Concerns are mounting that project scheduling could become more challenging, as selecting a new construction contractor will take considerable time and the possibility of legal disputes with the existing consortium remains. KHNP, however, says that even if the contractor change causes some disruption, the project can recover. The company plans to identify essential work and either carry it out directly or arrange separate contracts before a new contractor is selected, minimizing gaps in the project schedule.

"It is not the case that there will be no impact on the project at all, but we believe we can recover from it," Choi said. "We are also communicating closely with the Czech government and the project owner, so we should be able to minimize the impact on the overall project."

The Czech government's requirement is to meet the planned construction milestones and commercial operation schedule. "What the Czech government wants is for us to meet the milestones and begin commercial operations on time," said Kim, the director. "If we fail to complete Dukovany on schedule, it will be a failure for Team Korea as a whole. We will do our utmost to prevent this from affecting overall nuclear power exports."

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