[The Editors' Verdict] The 'Czech Nuclear Power Plant' Standing Between Jackpot and Bust

Is the Czech nuclear power plant contract a jackpot? Since South Korea was selected as the preferred negotiator for the Dukovany nuclear power plant project in the Czech Republic last July, the government and opposition parties have been clashing over this issue.

According to the government's announcement, it is a jackpot. If South Korea's final contract is confirmed by March next year, it will be responsible for the entire project, including the design, procurement, construction, commissioning, and nuclear fuel supply of a large 1000-megawatt (MW) nuclear power plant (APR1000). The estimated project cost is about 24 trillion won. This would mark the first overseas large-scale nuclear power plant contract in 15 years since the Barakah nuclear power plant in the United Arab Emirates (UAE) in 2009. The Czech government plans to build two more nuclear reactors later, and if South Korea wins those contracts as well, the project cost could grow to about 48 trillion won.

The opposition party's assessment is that it is a bust. Although the contract amount is large, they argue there is no real benefit. The opposition claims that out of the 24 trillion won project cost, 9 trillion won (for Dukovany Unit 5) will be financed by the Czech Republic, but the remaining 15 trillion won will likely be provided as long-term low-interest loans by Korean financial institutions (according to the National Assembly audit on the 14th of last month targeting Korea Hydro & Nuclear Power and others, and Representative Jeong Jin-wook of the Democratic Party). Considering that the local company utilization rate for this project is as high as 60%, and that at least 10% of the minimum profit must be paid to the U.S. company Westinghouse as royalties, they evaluate that there is practically nothing left as profit.

In reality, it is difficult to know whether this project will be a jackpot or a bust. Only the project cost has been revealed, and the contract has not yet been finalized. Even if the contract is concluded, the situation will be similar. Typically, such contracts include confidentiality clauses citing national security reasons. Therefore, even if the final contract is secured by March next year, it is highly likely that the contract terms will not be disclosed.

However, if this project turns out to be a jackpot, it could cause problems. The Czech government might try to cancel the project. If they cannot cancel it, they may reduce the project cost or increase the share of local companies. If the contract is signed without knowing this, Czech politicians will not remain silent. Competing countries will also jump in.

It also cannot be a bust. The South Korean construction industry could collapse. The industry has no strength to endure loss-making contracts after years of construction recession. In particular, domestic construction companies have experienced a crossroads of survival after winning numerous low-priced plant contracts in the Middle East in the past. They have not yet fully recovered from those painful past experiences, so winning a 'bust' contract would be tantamount to suicide.

The profitability of this project is likely somewhere between a jackpot and a bust. However, since profitability is being examined only at the extremes of jackpot and bust, the debate never ends. The government, which needs to promote achievements such as the president's visit to the Czech Republic, and the opposition, which criticizes it, inevitably take opposing extreme positions.

Companies are frightened by this fruitless political strife. A phobia of overseas project contracts is spreading in the construction industry. There is a perception that if overseas contracts succeed, "we too could be put under scrutiny." What if the management is summoned to the National Assembly after barely winning a contract?

The government should support companies in winning contracts, and the opposition should properly verify state affairs. However, the baseless flood of criticism must stop. Nuclear power plants are not only being built in the Czech Republic. About 63% of nuclear power plants worldwide have exceeded their 30-year operational lifespan. South Korea ranks 5th in power generation capacity and is one of the top six countries with nuclear export capabilities. It is also considered one of the best technological countries capable of peacefully using nuclear power. Companies are already striving to win a second or third Czech nuclear power plant contract. It is time to reconsider who we should be fighting against.