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K-water edges toward Thai project win

Korean state-run company completes price negotiations for $5.3b scheme in Thailand

June 20, 2013 - 20:18 By Seo Jee-yeon
Korea Water Resources Corp., or K-water, has completed price negotiations with the Thai government over a Thai water management and flood prevention scheme, raising hopes that the preferred bidder will win the massive project.

“Both sides agreed to set the cost at 6.1 trillion won ($5.3 billion) to proceed modules A5 and A3 out of nine modules, which the Korean company won,’’ the Ministry of Land, Infrastructure and Transport said in its statement on Wednesday.

The A-5 project to build floodways in eastern Thailand is expected to cost 5.9 trillion won, while the remaining budget will be allocated for the A-3 project to build reservoirs in the west, according to ministry officials.

But it remains to be seen whether the final selection and the implementation of the project will be proceed without a hitch.

“Following the price talks, the second round of negotiations to discuss detailed project conditions will start, which will take more time and efforts for an agreement,’’ said a K-water official involved in the project.

The second round of talks is expected to take more than two months and the final contract signing is expected to be held in September at the earliest.

Regarding the terms of reference for A-3 and A-5, most of all, the Korean corporation plans to ask for the Thai government’s involvement in land expropriation.

The current reference terms call for project winners to deal with the issue without government support, which is rare in international business practice.

“The current contract terms also don’t allow exceptional cases for project delays caused by uncontrollable situations such as natural disasters,’’ the official said, adding that the Korean consortium would do its best to wrap up the second-round talks.

The Thai government appointed a project management consultancy to negotiate details of contacts with four preferred bidders for nine modules, but industry watchers said it would not be easy for the two sides to negotiate some of the contract terms as the Thai government faces rising opposition from the public against the project.

Korean subcontract builders for K-water involved in the project include Hyundai Engineering and Construction, GS Engineering and Construction, Daewoo Engineering and Construction, Daelim and Samwhan Corporation.

By Seo Jee-yeon  (jyseo@heraldcorp.com)