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Korea Reduced to a Subcontractor for Maintenance of UAE Nuclear Plant
Team Korea Wins Contract for Part of Maintenance Work
Korea Reduced to a Subcontractor for Maintenance of UAE Nuclear Plant
  • By Jung Suk-yee
  • June 25, 2019, 14:22
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Chung Jae-hoon (left), president of Korea Hydro & Nuclear Power Co., poses for a photo with Mark Reddemann, CEO of Nawah Energy Co., after signing a maintenance agreement in Abu Dhabi on June 23 (local time).

South Korea has failed to conclude an exclusive contract with the United Arab Emirates for maintenance of the Barakah nuclear power plant.

Team Korea, a consortium formed by Korea Hydro and Nuclear Power Co. (KHNP) and KEPCO KPS, signed a long-term maintenance services agreement (LTMSA) with Nawah Energy Co., the operator of the nuclear power plant on June 23 (local time).

Yet the contract is not an exclusive 10-year contract for overall maintenance of the nuclear plant that the consortium has originally pursued. Industry experts say the contract is actually a subcontract for part of the maintenance work.

Nawah Energy has concluded a maintenance service agreement (MSA) with Doosan Heavy Industries & Construction (DHIC), a subsidiary of Doosan Group, for the nuclear power plant.

Nawah Energy is expected to sign similar contracts with foreign companies that participated in the bidding process. It has left under wraps its contracts with non-Korean companies.

Under the contract, the KHNP-KEPCO KPS consortium will dispatch senior maintenance officials to Nawah. The reason that the contract was changed to an LTMSA instead of the originally planned long-term maintenance agreement (LTMA) is that Nawah plans to make additional contracts with other companies. As for the change of the agreement type, Nawah said it wanted to have a multiple number of companies provide maintenance services for it.

In fact, Nawah will reportedly conclude a maintenance consulting contract with Allied Power of the United States in the future. A Korean government official said, "We cannot rule out the possibility of the UAE signing additional contracts with other companies."

Analysts say that the contract terms are also rather unsatisfactory. First, the contract period was expected to be 10 to 15 years, but it was reduced to five years, which does not meet the name of a "long-term contract." Accordingly, the value of the contract is expected to go down from the originally expected 3 trillion won to hundreds of billion won. Regarding the contract amount, Nawah said, “It is impossible to provide a specific figure now because it will be calculated according to the future service directive.”