Builder urges government mediation, warning replacement tender could delay Dukovany project
Daewoo Engineering & Construction urged the government Monday to mediate its dispute with Korea Hydro & Nuclear Power over a Czech nuclear project, warning that finding a replacement builder could jeopardize the project's schedule.
The appeal came four days after KHNP ended subcontract negotiations with a Daewoo-led consortium, including Doosan Enerbility, over construction costs and responsibility for additional work arising from design changes.
Daewoo asked the Ministry of Trade, Industry and Resources to review its final proposal and help reopen talks while KHNP proceeds with a tender for a replacement contractor.
"It will not be easy to find a construction company willing to accept the same risks under the conditions currently offered to the Daewoo consortium," the company said.
Daewoo warned that a failed tender could delay construction and damage Korea's reputation for delivering nuclear projects on time and within budget.
KHNP aims to sign a new construction contract by July 2027 for the two APR1000 reactors.
The ministry activated an emergency oversight system Monday, with the minister and vice minister alternating weekly meetings to monitor progress.
The government is seeking to preserve key milestones, including a construction permit application in April 2027, site preparation in January 2029 and the start of construction that November.
The latest appeal follows conflicting accounts from Daewoo and KHNP over why more than a year of negotiations collapsed.
Daewoo said it submitted a revised proposal Thursday morning that lowered the overall price and accepted some increases in construction quantities, despite potentially leaving the consortium with hundreds of billions of won in losses.
KHNP nevertheless terminated negotiations, citing unresolved differences over additional work identified since the consortium's 2024 bid, according to Daewoo.
At the heart of the dispute is who should bear the financial risks of construction work that has yet to be fully defined.
Daewoo said its original bid estimated construction costs at 8.2 trillion won, with payments subject to adjustment based on actual quantities.
The consortium sought a separate contract for additional work arising from design changes, while KHNP wanted those costs included in the final agreed price, Daewoo said.
The builder argued that uncertainty is particularly significant because Dukovany will be the first commercial deployment of Korea's APR1000 reactor.
Unlike the APR1400 reactors built at the Barakah nuclear plant in the United Arab Emirates, the APR1000 lacks a completed reference project, making construction costs harder to predict, it said.
With the basic design unfinished, Daewoo argued that requiring contractors to absorb costs arising from designs outside their control would conflict with FIDIC Red Book principles governing construction contracts based on employer-provided designs.
Daewoo also claimed it had spent tens of billions of won on personnel and preliminary work without reimbursement since KHNP instructed the consortium to begin preparations in July 2025.
The company warned that termination of the cooperation agreement could trigger legal proceedings but announced no legal action.
KHNP rejected the claims it was seeking to transfer risks unfairly, saying it had offered to reflect increased construction quantities, finalize the price after basic design approval and pay for most civil engineering work based on actual quantities.
It maintained that the requested price cuts targeted excessive or duplicated charges identified through external reviews, and that prolonging negotiations risked further delays.
herim@heraldcorp.com
