[Q&A] Korea Hydro & Nuclear Power said, “There will be no significant impact from replacing the Czech nuclear power plant contractor.”

“Declaration of termination of negotiations today for timely completion…Selection of new construction company within July of next year”

(Seoul, Sejong = Yonhap News) Reporter Oh Ye-jin and Jang Bo-in = Korea Hydro & Nuclear Power (KHNP) Business General Manager (Vice President) Choi Il-kyung said on the 29th regarding the final breakdown of contract negotiations with Daewoo Engineering & Construction-Doosan Energy Consortium, the construction company for the Dukovany nuclear power plant project in the Czech Republic, saying, "The replacement of the contractor will not have a significant impact (on the project)."

Director Choi emphasized that what the Czech Republic values ​​is ‘timely completion’ and that “we will do our best to achieve timely completion.”

KHNP plans to complete the selection of a new construction company by July of next year and does not plan to sign contracts with foreign companies.

The following is a Q&A with Director Choi and Kim Chang-hee, Director of Nuclear Power Plant Strategy Planning at the Ministry of Trade, Industry and Energy.

-- The contract change process is

▲ When the first bid was entered into for the Czech nuclear power plant project, the ordering company requested a method for finalizing the total amount, and both Korea Hydro & Nuclear Power and Daewoo Consortium agreed.

So, we ended up bidding in that way in 2022 (initial bidding) and 2023 (revised bidding). In 2023, we still proposed the total amount method. However, Daewoo was unable to stick to the method of finalizing the total amount that had been discussed with Korea Hydro & Nuclear Power and sent a proposal to Korea Hydro & Nuclear Power to request a method of settling the quantity (cost) (due to additional construction). A lot of processes went through, but at that stage, a proposal was received to unilaterally increase the unit price. Korea Hydro & Nuclear Power could not accept this, so it made a final bid to the Czech Republic based on the total amount.

-- The difference in project costs due to the consortium's contract change request is

▲ It is difficult to give a specific number, but it is beyond what KHNP can handle. It is difficult to say the size of the amount, but (the consortium's request for increase) exceeds 1 trillion won, so it is enormous.

-- Are the positions of the Ministry of Trade, Industry and Energy and Korea Hydro & Nuclear Power the same regarding the end of negotiations?

▲ (Kim Chang-hee, Nuclear Power Plant Strategy Planning Director) To ensure timely completion, final confirmation must be made today (29th). I respect Korea Hydro & Nuclear Power’s decision to make that decision. We will do our best to support new construction companies. We will work hard to complete construction in a timely manner.

-- The Czech side's position is

▲ (Nuclear Power Plant Strategy Planning Director Kim) Since February, we have been communicating in real time with the Czech government on this issue to build trust. Last week, during the DSC (Dukovany Implementation Review Consultative Committee) meeting with the Czech minister, it was said that a conclusion would be reached to some extent in October. The Czech side's basic request is to start the project in a timely manner. We will do our best to minimize the impact (due to the breakdown of negotiations) and ensure timely completion.

-- Regarding the collapse of the contract, Korea Hydro & Nuclear Power stated that Daewoo Engineering & Construction lacked expertise in nuclear power plant construction. Was this not reviewed at the time of the first consortium contract?

▲ In 2018, the Daewoo consortium received good scores and was selected as a result. From its current perspective, Daewoo has judged that many of its manpower and experience have been lost as there have been no major projects since the Wolseong nuclear power plant over the past 15 years.

Another factor is the level of experienced manpower required by the ordering company. (The consortium) said to eliminate such conditions rather than secure such personnel, which also influenced the decision.

-- When will the announcement of the new construction company be announced? Are domestic companies participating?

▲ Of course, it is a Korean company. The question is whether it is the Daewoo-Doosan consortium, the Hyundai consortium, or the Samsung consortium. There are no plans to open it to foreign companies. It seems likely that the bid will be announced at the end of March or April 1 next year. A new construction company will be selected within July of next year.

-- Even if the Daewoo consortium files a legal action regarding termination of the contract, can new bids continue? In this case, a new construction company may not be selected until July, so why does Korea Hydro & Nuclear Power say there is no impact?

▲ It doesn’t mean there is no impact at all. Of course there is. I'm just doing my best. If a contract has been signed with the Daewoo-Doosan consortium, all the things that should have been done there will be listed, and the things that KHNP can do directly will be done directly. We also plan to issue a contract for small initial work. The impact (due to a breakdown in negotiations) will be reduced.

There may be legal action (against the Daewoo consortium). If legal judgment is necessary, we will respond faithfully.