Dukovany Nuclear Plant Construction Talks Collapse; Costs and Allocation of Responsibility at Issue
Korea Hydro & Nuclear Power (KHNP) ended negotiations with the construction company for the Czech Republic’s Dukovany nuclear plant and decided to pursue a competitive bid for a new contractor. The sticking points were construction costs, contract structure, scope of work and allocation of responsibility. KHNP sought a lump-sum contract with the price fixed during the basic design phase, while the contractor demanded additional payments for increased work volumes after detailed design.
KHNP plans to maintain its schedule to begin main construction in November 2029, but it remains uncertain whether the time required for a new contractor to take part in design and permitting can be shortened. Concerns about delays therefore remain. Shares of nuclear-related companies, including Doosan Enerbility and Hyundai Engineering & Construction, plunged on the news, with Doosan Enerbility falling more than 10% intraday.
A contractor may seek flexibility in contract terms to account for the risk of changes in costs and construction volumes. If the original contract was won at a low price, leaving KHNP little room to revise the terms, concerns have emerged that profitability issues could recur even if a new contractor is selected. Observers said that any future renegotiation or new bidding process should consider both the structure of the prime contract and the contractor’s profitability.