SEOUL, May 08 (AJP) - Korea Hydro & Nuclear Power (KHNP) has filed for international arbitration against its parent company, Korea Electric Power Corporation (KEPCO), over a protracted dispute involving more than $1 billion in unsettled construction costs tied to South Korea’s landmark nuclear power project in the United Arab Emirates.
According to the KHNP, it has brought the case to the London Court of International Arbitration, citing unresolved payments related to the Barakah nuclear power plant.
The dispute stems from cost overruns during the decade-long construction of the facility, which marked South Korea’s first foray into exporting nuclear reactor technology.
The Barakah project, valued at approximately 20 trillion won (roughly $15 billion), was initiated in 2009 after KEPCO signed a contract with the Emirates Nuclear Energy Corporation.
KEPCO later subcontracted much of the work to KHNP and other domestic partners. But as costs ballooned — due in part to the COVID-19 pandemic and global supply chain disruptions linked to the war in Ukraine — KHNP began seeking reimbursement from KEPCO for the overruns.
KHNP formally initiated negotiations in late 2023, though industry officials say the company had been raising concerns over the extra costs since at least 2020. The dispute escalated after Barakah Unit 4, the last of the four reactors, began commercial operations in September of last year.
KEPCO, which is grappling with debt exceeding 200 trillion won (around $145 billion), has rejected KHNP’s claims, arguing that it cannot make any additional payments until it receives compensation from its Emirati counterpart. “Settlement cannot be made without receiving additional funds from the client,” the company said in a statement.
KHNP has countered that failure to resolve the issue risks undermining trust and jeopardizing future cooperation between the firms.
Despite a high-level meeting between the two companies’ presidents in January, the standoff deepened in February when KEPCO’s chief, Kim Dong-chul, told lawmakers he “cannot accept” KHNP’s demands.
The clash has drawn attention to long-simmering structural tensions within South Korea’s power sector. Though KHNP is a wholly owned subsidiary of KEPCO, the two have increasingly jostled for leadership in nuclear exports, particularly since the 2001 restructuring that divided the country’s power industry into separate generation entities.
Observers say the conflict highlights governance gaps and poor coordination within the state energy apparatus. Critics have also pointed fingers at the Ministry of Trade, Industry and Energy, accusing it of failing to step in as a mediator.
“The ministry, which oversees public corporations, should have intervened earlier,” said one former senior official, who spoke on condition of anonymity. “This situation was allowed to fester because no one wanted to take responsibility during the government transition period.”
reporter
Candice Kim
candicekim1121@ajupress.com
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