Egypt's Eldaba Nuclear Power Plant Contract Lost in First Half... 'Clock Stopped' Due to Russia-Ukraine War

[Asia Economy Sejong=Reporter Dongwoo Lee] The contract for the El-Dabaa nuclear power plant in Egypt, for which Korea Hydro & Nuclear Power (KHNP) was selected as the sole negotiation partner, is ultimately being delayed beyond the first half of the year. Considering that JSC ASE, which won the nuclear power plant order, is a subsidiary of Rosatom, a Russian state-owned nuclear company, it is analyzed that the prolonged Russia-Ukraine war and Western sanctions against Russia are acting as major variables.

According to the nuclear power industry on the 2nd, KHNP's sole negotiations with JSC ASE for the construction of the El-Dabaa nuclear power plant turbine building and others are being delayed. KHNP had previously expected to finalize the contract by the end of April, but the delay in the contract has extended beyond the first half of the year.

The El-Dabaa nuclear power plant in Egypt is a large-scale project worth 30 billion dollars, approximately 37 trillion Korean won. JSC ASE won the project as a turnkey contract, and KHNP was selected as the sole negotiation partner for the construction of the remaining secondary auxiliary buildings, including the turbine. South Korea had high expectations as it was about to secure a nuclear power plant export order for the first time in 13 years since the Barakah nuclear power plant in the United Arab Emirates (UAE) in 2009. According to the plan, construction was to begin this month.

The problem is that the prolonged war and continued international sanctions against Russia have increased the uncertainty of the contract. According to the industry, it is known that about 85% of the El-Dabaa nuclear power plant construction project cost is being replaced by a Russian government loan, raising concerns about default even if the project starts. In fact, Russia recently defaulted on interest payments on foreign currency-denominated bonds for the first time in about 100 years.

Strengthening of Korea-US nuclear cooperation is also a variable. Some in the industry interpret that as Korea and the US strengthen their alliance to respond to the nuclear power plant market dominated by Russia and China, the contract with Russia may be burdensome. The longer the contract is delayed, the more inevitable the damage to domestic companies participating in the nuclear power plant project, including KHNP.

However, KHNP states that large-scale orders such as nuclear power plant projects are subject to external variables causing delays beyond expectations, so there is no cause for concern. A KHNP official said, "Although the contract is somewhat delayed beyond the expected period, negotiations are continuously ongoing."