KHNP-Daewoo deal derailed on W25tr Czech nuclear project

Korea Hydro & Nuclear Power has broken off construction contract talks with a Daewoo Engineering & Construction-led consortium for its $18.6 billion Czech nuclear project, exposing a major rift within the South Korean team behind one of the country's largest overseas nuclear deals.

The state-run nuclear operator said Thursday it would move to terminate its cooperation agreement with the consortium, which includes Doosan Enerbility, and launch a new bidding process to find a replacement contractor.

The breakdown follows more than a year of disputes over construction costs and who should bear the financial burden of design changes. According to industry sources, KHNP demanded a cut of more than 10 percent from the consortium's original bid, equivalent to over 1 trillion won ($750 million).

KHNP said the two sides failed to agree on key contract terms despite prolonged negotiations. The consortium accused KHNP of making a unilateral decision and called for talks to resume.

The dispute raises concerns over potential delays and legal complications for the Dukovany project, which involves building two 1,000-megawatt APR1000 reactors in the Czech Republic. The deal is valued at approximately 407 billion Czech crowns ($18.6 billion), or 25 trillion won.

Choi Il-kyung, KHNP's vice president and head of project operations, played down the risk of major disruption.

"While there may be some impact, we believe we can fully recover from it," he said. "We are communicating closely with the Czech government and the customer."

Daewoo E&C and Doosan Enerbility were selected as construction partners in 2018 and participated in the bidding process that led to KHNP signing the main contract with the Czech customer in June 2025. However, the companies have yet to finalize a construction subcontract.

In a statement Thursday, the consortium said it had agreed to accept the construction unit prices submitted to KHNP in January 2024 and offered further concessions that would leave it absorbing financial losses.

The consortium said the main sticking point was a set of revised contract terms introduced by KHNP on Oct. 7, giving it only about three weeks to review the changes.

It requested an extension until Dec. 31, but KHNP rejected the proposal.

The consortium argued that the review period was unreasonable, particularly as Dukovany would be the first commercial deployment of the APR1000 reactor design.

At the heart of the dispute is KHNP's proposed fixed-price contract, which the consortium said would force contractors to shoulder additional construction costs arising from design changes beyond their control.

The consortium argued that contractors should not be required to absorb substantial additional work without compensation, warning that the proposed terms could threaten their financial viability.

KHNP countered that fixed-price contracting was essential to meet its obligations under its own agreement with the Czech customer.

The operator said it had raised its proposed payment to reflect additional work while seeking cuts to costs identified through external reviews as excessive, duplicated or incorrectly calculated.

KHNP proposed fixing the construction price once the basic design was approved, while the consortium sought payment adjustments for additional work identified during detailed design.

The operator argued that accepting such adjustments would leave it exposed to cost overruns under its own fixed-price contract.

KHNP also denied that its cost-cutting demands were linked to an underpriced bid or financial obligations stemming from its settlement with US nuclear technology company Westinghouse Electric.

With negotiations at an impasse, KHNP plans to select a new contractor through competitive bidding, aiming to sign a contract by July 2027 and begin site preparation as scheduled in January 2028.

Choi said Daewoo E&C and Doosan Enerbility would remain eligible to participate despite a provision in their cooperation agreement barring them from rebidding.

He said the failed negotiations would not count against them, although they would have to compete under a selection process based largely on quantitative criteria and overseen primarily by external evaluators.

KHNP said essential design, permitting and project management work would continue during the transition.

The consortium urged KHNP to reconsider its decision and resume negotiations in the national interest.

Other major Korean supply contracts remain unaffected, including Doosan Enerbility's roughly 5.6 trillion won reactor equipment contract and a separate engineering agreement with Korea Electric Power Engineering & Construction.

KHNP clarified that ending negotiations would not automatically terminate the existing cooperation agreement, which requires a separate procedure.