KHNP Faces Client Warning Over Dukovany Construction
The breakdown of construction contract negotiations between Korea Hydro & Nuclear Power (KHNP) and Daewoo Engineering & Construction over the 26 trillion won (about $20 billion) Czech Dukovany nuclear power plant construction project is rapidly expanding into a full-scale risk. As the fierce truth-s
The construction contract negotiations between Korea Hydro & Nuclear Power (KHNP) and Daewoo Engineering & Construction for the 26 trillion won (approximately $20 billion) Czech Dukovany nuclear power plant project have spiraled into a major risk. As tensions rise between the two parties, the local client, Dukovany II Nuclear Power Plant, has issued a strong warning to KHNP, stating that KHNP bears full responsibility for selecting the construction contractor and that any delays or cost increases in future construction will be held accountable.
In response, KHNP has launched an urgent process to re-select a construction contractor and has set a roadmap for a preliminary briefing session in January 2027 and finalizing a new contractor agreement by July 2027. However, domestic construction industry professionals remain hesitant due to the 'lump-sum construction cost method' that forces contractors to bear all additional cost risks, including inflation and supply chain instability.
Major domestic construction companies like Hyundai Engineering & Construction and Samsung C&T are hesitant due to past losses from similar lump-sum contracts, such as the UAE Barakah nuclear power plant project. Internal disputes over the contractor replacement process have also intensified, with the Daewoo Engineering & Construction labor union alleging that KHNP had already replaced Daewoo Engineering & Construction before the official breakdown of negotiations.
This conflict over contractor selection could lead to a legal dispute and raise questions about the reliability of the South Korean nuclear power industry. The project, while a significant achievement for South Korea, now faces a triple burden: client warnings, a lack of domestic construction company participation, and internal labor union backlash.
Experts advise that KHNP must find a way to incentivize construction companies through transparent communication and a more flexible contract structure to ensure the project's success.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
