IN Brief:
- KHNP has ended negotiations with the Daewoo–Doosan construction consortium for two APR1000 reactors at Dukovany.
- The parties disagreed over construction quantities, pricing and responsibility for costs arising from detailed design changes.
- KHNP aims to select a replacement contractor by July 2027, while existing engineering and major equipment supply contracts continue.
Korea Hydro & Nuclear Power (KHNP) has ended construction contract negotiations with Daewoo Engineering & Construction and Doosan Enerbility for two new APR1000 nuclear reactors at Dukovany in the Czech Republic. The parties failed to agree on construction pricing and the allocation of costs associated with changes during detailed design. KHNP will begin selecting a replacement contractor while continuing engineering and equipment procurement under separate agreements.
The decision follows approximately 15 months of negotiations after KHNP signed the main nuclear project contract with Czech developer Elektrárna Dukovany II in June 2025. Discussions included working-level meetings, dispute resolution proceedings and negotiations between senior executives. The companies remained unable to agree on essential commercial terms, prompting KHNP to begin procedures to terminate the existing cooperation agreement.
The proposed construction contract would have covered work on two APR1000 pressurised water reactors, each rated at approximately 1,000MW of electrical generating capacity. The project is being developed alongside the existing Dukovany nuclear power station, with KHNP responsible for delivery under its agreement with the Czech customer. The failure of the construction negotiations does not terminate that main project contract.
A principal disagreement concerned the method used to establish the construction price. KHNP favoured an arrangement based on quantities determined during basic design, with the total price established against that baseline. The consortium wanted adjustments to reflect quantities identified during detailed design, when the engineering information becomes more complete and the amount of construction work can be calculated more precisely.
That distinction affects responsibility for changes in the construction programme. Detailed engineering may identify additional materials, structural elements or installation requirements that were not fully defined during earlier design stages. Under a fixed-price arrangement, the contractor may bear more of the resulting cost exposure unless the contract establishes circumstances in which variations are permitted.
The consortium argued that its limited control over the reactor design made the proposed allocation of those risks commercially difficult. KHNP maintained that its pricing approach was necessary to align the construction package with the main project agreement and provide greater certainty over delivery costs. Revised proposals and additional negotiations did not resolve the disagreement.
Daewoo Engineering & Construction subsequently disputed the decision to end negotiations and sought further discussions. The contractor said it had submitted a revised proposal and requested additional time to assess the commercial terms. KHNP proceeded with preparations for another procurement process, leaving the previous consortium without an agreed construction contract for the project.
The replacement process is expected to involve competitive bidding. KHNP has outlined an indicative programme involving discussions with prospective contractors in January 2027, a tender during April and selection by July. The detailed procurement timetable has not been finalised, and the prospective contractors have yet to be appointed.
KHNP intends to continue essential engineering, licensing and project management activities during the transition. These include work that would otherwise need to be coordinated with the main construction contractor, such as supporting infrastructure design and preparations for moving heavy equipment to the site. Maintaining those activities could reduce disruption while the replacement procurement proceeds.
Other major project contracts remain in force. KEPCO Engineering & Construction has an agreement covering comprehensive design services, while Doosan Enerbility holds separate contracts for reactor equipment and turbine generator equipment. Doosan’s involvement in the unsuccessful construction negotiations is therefore distinct from its manufacturing responsibilities under those existing supply agreements.
The separation is important because nuclear plant construction depends on engineering and manufacturing activities that progress before major equipment reaches the site. Reactor vessels, steam generators, turbine equipment and other large components require lengthy manufacturing and inspection programmes. Their installation also depends on the completion of supporting civil structures and the availability of suitable lifting and transport arrangements.
A change in construction contractor requires the project team to maintain those interfaces across different organisations. Foundation dimensions, equipment supports, access routes and installation sequences must match the approved design and the manufactured equipment. Changes to the civil construction programme can affect when components can be delivered or installed, even where their manufacture continues on schedule.
The APR1000 is a South Korean pressurised water reactor design intended for deployment in European and other international markets. Heat generated within the reactor core is transferred through the primary coolant circuit to steam generators. The secondary circuit supplies steam to the turbine, which drives the electrical generator. Cooling, instrumentation, control and electrical systems support the operation of the integrated installation.
Construction and commissioning of those systems require coordination between the reactor island, turbine island and electrical infrastructure. Transformers and switchgear provide the interfaces needed to deliver generated electricity to the transmission network, while separate electrical supplies support plant auxiliaries and safety-related equipment. Protection systems must distinguish faults within the generating station from disturbances on the external network.
These engineering requirements influence the scope of the construction contract because equipment supplied by one organisation must be installed within structures delivered by another. The contractor’s responsibilities can include civil works, installation support, access arrangements, construction logistics and management of subcontractors. Contract terms must identify which party bears the cost of changes affecting those activities and how the changes are authorised.
KHNP is also progressing arrangements for nuclear fuel supply through KEPCO Nuclear Fuel and commissioning and maintenance services involving KEPCO KPS. Those agreements remain under negotiation, with signing targeted during 2027. Their eventual scope must be coordinated with the construction and engineering programme, particularly where commissioning activities depend on completed systems and approved operating procedures.
The current project schedule provides for site preparation beginning in January 2028 and principal construction activities commencing in November 2029. KHNP has said it intends to preserve the existing programme, although the appointment of a replacement contractor introduces a procurement and contractual task that was not part of the original delivery sequence.
Site preparation will involve activities needed before the main nuclear structures can be constructed, including civil engineering, access and supporting infrastructure. The precise works must be coordinated with the design and permitting programme. Construction of nuclear safety-related structures is subject to additional engineering controls and regulatory requirements, which must be satisfied before the relevant stages can proceed.
The Czech customer retains its agreement with KHNP, while the South Korean company remains responsible for assembling the delivery team capable of fulfilling that contract. The replacement contractor will need to agree construction pricing, design interfaces, responsibility for variations and the programme for completing the works. Those decisions will establish the commercial framework under which the remaining construction activities are undertaken.
Selection of the replacement contractor is targeted for July 2027. Until then, KHNP intends to progress essential design and project preparation work while retaining its existing equipment supply arrangements. Completion of the new construction contract will determine how the project is reorganised and provide a firmer basis for assessing its remaining delivery schedule.
