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Hyundai E&C in Dispute with Chilean Gov’t over Construction of US$740 Mil. Bridge
Talks Underway on Additional Costs
Hyundai E&C in Dispute with Chilean Gov’t over Construction of US$740 Mil. Bridge
  • By Jung Min-hee
  • December 26, 2019, 14:07
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An image of the Chacao Bridge under construction in Chile (Image source: http://global.pec.kr)

Hyundai Engineering & Construction is in dispute with the Chilean government over construction of the Chacao Bridge, a US$740 million bridge that the Korean builder has been awarded in 2014.

In a press release issued on Dec. 23, Hyundai E&C criticized the Chilean Ministry of Public Works (MOP) for seeking to increase the scope of the project without additional remuneration and announced that it had suspended construction of the bridge, which will connect the Chilean island of Chiloe to the mainland.

Hyundai said that although the MOP approved the final engineering project in December 2018, it did not fulfill its commitment to address the project changes in the contract and compensate for the higher costs associated with the changes ordered.

“The breach of the commitments made by the MOP, the bad faith with which the conversations have been carried out, the unjust damage that derives from it and the complete legal uncertainty that prevails as a consequence, has led us to the conclusion that it is impossible, in these conditions, to continue with the project,” Hyundai said in the press release.

The MOP said in its statement on Dec. 23 that Hyundai E&C had sought to increase the cost of the project by 50 percent, or $300 million, a request rejected both by the current government of President Sebastian Pinera and the former government of Michelle Bachelet.

Chile’s finance minister acknowledged that a row has erupted between the government and Hyundai E&C, saying disputes in such mega projects were “quite common.”

“As far as I understand, the government has honored exactly what the contract defines, but the Korean company says the opposite has occurred. ... When there are these discrepancies...it is for the courts -- if it gets to that point -- to decide,” Chile’s Finance Minister Ignacio Briones was quoted as telling Chilean daily El Mercurio on Dec. 24.

On Dec. 26, Hyundai E&C said in a press release that the bridge construction is still under way. “It is true that negotiations are underway on the additional costs associated with the project changes. But it is not true that the project has been suspended. Construction work is progressing as scheduled,” the company said.

The 2.5-km-long bridge, when completed, would be Latin America’s longest suspension bridge. The project was first proposed in 1972, but has been canceled and postponed several times.