SEOUL, February 24 (AJP) - Korea Electric Power Corp. (KEPCO) and its subsidiary Korea Hydro & Nuclear Power (KHNP) are preparing for international arbitration over $1 billion of additional costs related to the Barakah nuclear power plant project in the United Arab Emirates.
Negotiations between the two entities have stalled, sources said.
Recent discussions between KEPCO’s chief executive, Kim Dong-chul, and KHNP’s president, Hwang Joo-ho, failed to resolve the impasse over cost settlements for South Korea’s first overseas nuclear initiative, originally valued at approximately 20 trillion won ($15 billion).
In January, KHNP formally filed a claim seeking $1 billion in additional compensation, citing project delays and extra work orders it attributed to KEPCO and the UAE.
Despite being a wholly owned subsidiary of KEPCO, KHNP argues that settlements should be handled independently under the terms of their Operating Support Services (OSS) contract.
“We cannot accept this,” Kim said during a National Assembly committee meeting, expressing frustration over KHNP’s demand for compensation from its parent company.
Following his remarks, KHNP reportedly began preparing to take the matter to the London Court of International Arbitration.
The dispute threatens to push the project’s cumulative profit margin into negative territory from its current 1 percent level. If unresolved, KHNP could face potential losses amounting to 1.4 trillion won ($1 billion), while KEPCO may need to reflect additional financial setbacks if it is unable to secure compensation from the UAE.
Both companies have already engaged legal counsel in anticipation of arbitration, as outlined in their OSS contract for dispute resolution.
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