South Korea’s Ministry of Trade, Industry & Resources (MOTIE) has launched an emergency management system to keep its KWR25,000bn ($17.5bn) Dukovany nuclear power plant project in the Czech Republic on schedule. The decision follows the collapse of construction contract negotiations between the state-run operator, Korea Hydro & Nuclear Power Co. (KHNP), and a domestic construction consortium comprising Daewoo Engineering & Construction (Daewoo E&C) and Doosan Enerbility.
Under the emergency framework, South Korea’s Industry Minister Kim Jung-kwan and the Vice Minister will personally review key project risks every week to ensure construction remains on track.
KHNP formally concluded the stalled talks and is launching a new bidding process to select a replacement construction contractor. Despite the domestic dispute, the South Korean government aims to sign an agreement with a new construction consortium by July 2027 so that construction can begin as scheduled in November 2027.
Minister Kim announced plans to introduce a neutral expert dispute mediation committee under the pending Nuclear Export Promotion Act to prevent similar internal stalemates on future exports. Kim explicitly urged “Team Korea” members to set aside internal corporate interests, stating that “no conflicts can take precedence over” fulfilling South Korea’s sovereign commitment to the Czech Republic.
“This is to quickly establish an action plan … so that trust in the Korean nuclear power industry’s core competitiveness, ‘On Time, On Budget’ (implementation of projects within a set deadline and budget), is not shaken, and to prevent similar cases from recurring,” the Ministry said.
The first meeting focused on how to carry out major tasks following the end of negotiations on existing construction contracts, the selection process and schedule for new construction companies, plans to achieve key milestones in a timely manner, and plans to implement follow-up measures related to construction contracts.
“In addition, we will carefully prepare plans and measures to implement key schedules without disruption, including the construction permit application in April next year, the start of site works in January 2029, and the start of construction in November of the same year,” the Ministry noted.
“The competitiveness of Korean nuclear power plants is a ‘team spirit’ that combines the capabilities of individual companies, and we must create a stronger Team Korea in preparation for many nuclear power plant export opportunities in the future.” Kim insisted.
The breakdown came after 15 months of gridlocked negotiations regarding the construction of two 1,000 MWe APR1000 reactors at the Dukovany NPP. The main friction points centred around surging material and construction costs alongside disagreements over who should bear the financial risks of design modifications required to build the South Korean-designed model in Europe for the first time.
The collapse of contract negotiations between Korea Hydro & Nuclear Power (KHNP) and the Daewoo-led construction consortium reveals a deep rift over financial risk allocation and contract structuring for a first-of-its-kind project. The fundamental disagreement centred on how construction costs should be calculated and adjusted as the project progressed.
KHNP insisted on a fixed-price, lump-sum contract based on “baseline quantities” established during the initial basic design stage. Because KHNP’s main agreement with the Czech project owner (ČEZ) features a fixed price with steep penalties for delays, KHNP sought to mirror those exact terms with its subcontractors to lock in absolute cost certainty.
Daewoo E&C argued that, because the detailed design was not yet fully finalised, it was financially reckless to lock in a fixed price. They demanded a contract structure that would allow them to adjust payments based on actual construction volumes determined during the detailed design and building permit stages.
The APR1000 reactor, a South Korean-designed model, was being commercialised in Europe for the first time. Navigating strict, unfamiliar European Union safety regulations and local building codes makes design modifications highly likely during the construction phase.
Daewoo E&C argued it defied global industry standards to force a construction contractor, with no responsibility for the reactor’s engineering design, to absorb the financial risks and secondary material costs due to structural design changes.
Industry sources indicate that the financial gap between what KHNP was willing to pay and what the builders required to break even was insurmountable. KHNP demanded that the consortium slash more than 10% from its original construction bid. KHNP also requested that the builders remove risk contingencies from their estimates, promising to handle contingencies on the corporate level – something the builders mistrusted.
In a final attempt to bridge the gap, KHNP offered a 10% price bump relative to its baseline terms and suggested floating adjustments for underground work. However, the builders concluded the offer still did not adequately cover the realities of surging global material costs and potential design inflation.
The final breakdown was accelerated by a collapse in trust over the timeline of the negotiations. In early October, KHNP presented a highly revised set of contract conditions. The construction consortium requested an extension until 31 December to adequately model the financial risks of the new terms.
KHNP denied the extension, giving the builders only three weeks to sign. When the consortium submitted a counter-proposal aimed at absorbing some losses while protecting against major design shocks, KHNP rejected it and terminated the 15-month joint cooperation framework.
The contract termination only impacts the construction segment. Doosan Enerbility’s separate multibillion-dollar agreements signed in December 2025 to supply major components, such as the reactors and turbine generators, are unaffected. Doosan has also publicly distanced itself from Daewoo’s sharp criticism of KHNP, signalling its intent to pursue the new construction tender.
