Dispute Intensifies Over 27 Trillion Won Czech Nuclear Plant Contract... Government, KHNP and Daewoo E&C Trade 'Blame Game'

KHNP: "Wide Gap Over Contract Terms"... Moves to Select New Contractor
Daewoo E&C: "We Agreed to Absorb Hundreds of Billions of Won in Losses, but Talks Were Unilaterally Halted"
Ministry: "No Authority to Mediate Company Negotiations"... Efforts to

The 27 trillion won project to build a new nuclear power plant in Dukovany, Czechia, is escalating into a dispute over responsibility after talks on the construction contract broke down. Korea Hydro & Nuclear Power (KHNP) says it ended negotiations because the contractor refused to accept its demands regarding construction costs and contract terms. Daewoo Engineering & Construction, meanwhile, says it proposed revisions that would have required it to absorb losses of several hundred billion won, but that negotiations were unilaterally halted. Even the Ministry of Trade, Industry and Energy (MOTIE), the ministry responsible for the project, has distanced itself from the dispute, saying it lacks the legal authority to mediate negotiations between the companies. Finding a solution to prevent disruption to this national nuclear power export project is proving difficult.

According to the nuclear power industry on November 3, the dispute over the construction contract for the Dukovany plant has intensified since KHNP announced on October 29 that it was ending negotiations with the consortium of Daewoo Engineering & Construction and Doosan Enerbility. KHNP plans to select a new contractor and proceed with the project as scheduled, while Daewoo Engineering & Construction is pushing back, calling for renewed negotiations mediated by the government.

The government, KHNP and Daewoo Engineering & Construction each have different positions on the dispute. MOTIE says it has no legal authority to mediate, while KHNP points to disagreements over the contract terms as the reason negotiations broke down. Daewoo Engineering & Construction, by contrast, argues that KHNP has unfairly shifted excessive risks arising from additional construction work onto the contractor.

KHNP says the consortium’s revised proposal, submitted on October 29, did not sufficiently accommodate its request to account for the increased volume of construction work. The consortium also maintained its position that additional work identified after it submitted its bid in 2024 should be handled under a separate contract, rather than included in the final contract price. KHNP concluded that it would be difficult to bridge the differences and ended negotiations. It plans to select a new contractor through competitive bidding by July 2027.

Daewoo Engineering & Construction, however, argues that the way negotiations were ended was itself unilateral. In a statement issued on November 2, the company said, “In a revised proposal submitted on the morning of October 29, we reduced the total construction cost and agreed to absorb some of the increased work volume, offering to bear losses amounting to several hundred billion won.” It added, “Just over 30 minutes after submitting the proposal, we learned through media reports that KHNP had unilaterally declared the negotiations over without seriously reviewing it.”

Daewoo Engineering & Construction says it is unreasonable to expect a contractor that is not responsible for the design to bear the risks arising from increased construction work and additional tasks without an adjustment to the construction cost. In particular, it claims that it carried out construction and permitting work under KHNP’s instruction to commence preliminary work in July 2025, advancing hundreds of billions of won without receiving reimbursement. It also raised the possibility of legal disputes over the termination of the existing agreement.

Daewoo Engineering & Construction further warned that unilaterally ending negotiations with a contractor that has been part of Team Korea for eight years and moving to terminate the existing agreement could lead to legal disputes. Its call for MOTIE to review the negotiations and final proposals presented by both sides and mediate renewed talks is based on this assessment.

The longer the two sides continue to dispute responsibility, the greater the uncertainty surrounding the project is likely to become. KHNP says it can keep the project on schedule by selecting a new contractor, but Daewoo Engineering & Construction believes it will be difficult to find another construction company willing to accept the terms offered to the existing consortium. If disputes over reimbursement for costs advanced and the termination of the agreement escalate into legal proceedings, additional costs could arise regardless of the selection of a new contractor.

Against this backdrop, MOTIE, the ministry responsible for the project, says it would be difficult to intervene directly in negotiations between the companies. The ministry has urged both sides to negotiate smoothly in order to honor commitments to the Czech government, but says it has no legal authority to mediate negotiations between companies with commercial interests at stake.

Article 3 of the Act on the Management of Public Institutions guarantees the autonomous operation of public institutions, while Article 51 stipulates the scope of oversight by the relevant government agencies. The government may oversee the operations of public institutions, but this is distinct from having the authority to compel them to accept specific contract terms or enter into a contract. However, since legally binding arbitration and administrative mediation to facilitate negotiations between the parties are separate matters, there is still room to discuss the government’s role.

An MOTIE official said, “With the two sides’ disagreement over construction costs so substantial, if the government were to reach a conclusion through mediation, it could become unclear who would be responsible if problems arise later. This is an issue in which the government would find it difficult to intervene hastily.” The official added, “Even if we receive a formal request for mediation from Daewoo Engineering & Construction, this is fundamentally a matter for the parties to the contract to resolve through consultation, so it would be difficult for the government to mediate directly.”

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