The dual structure for nuclear power plant exports between Korea Electric Power Corp. (KEPCO) and Korea Hydro & Nuclear Power (KHNP), in place since 2016, has been causing inefficiency and confusion, the Board of Audit and Inspection said. The audit agency notified the companies of proposed improvements, including reunifying the structure and establishing a dedicated nuclear export agency.
The Board of Audit released the findings of its regular audit of KHNP on Thursday. According to the board, KHNP operates 10 departments with 567 staff and KEPCO runs six departments with 216 staff for nuclear export business, resulting in overlapping functions.
KEPCO has relatively limited experience in nuclear plant management and a shortage of specialized personnel, making the use of KHNP's infrastructure unavoidable in the nuclear export process. However, the lack of clear standards for decisions such as the project management structure has caused confusion in their cooperation, the audit found.
In particular, insufficient information sharing and personnel and technology cooperation have generated inefficiencies during nuclear plant bidding and negotiation processes, the board said. It also warned that a lack of consistency in external negotiations and responses could undermine national credibility.
In the case of the Saudi Arabia nuclear export project, disagreements arose as KHNP demanded joint prime contractor status, disrupting cooperation on personnel and technology support from April 2022.
KEPCO also refused to share information such as UAE project costs when KHNP was pursuing the Czech project. KHNP, for its part, unilaterally withdrew a large portion of its personnel dispatched to KEPCO's UAE project and responded passively in providing technology and personnel for the Saudi project. The two entities had previously engaged in an international dispute over about 1.4 trillion won ($1 billion) in additional construction cost burdens related to the UAE project.
Accordingly, the Board of Audit proposed improvements including signing a memorandum of understanding (MOU) specifying cooperation standards, strengthening the coordination function of the Nuclear Export Council, and ensuring the participation of parent company KEPCO in key decisions related to KHNP's nuclear exports. It also suggested the need to review governance reforms, such as unifying the structure under one institution or establishing a separate dedicated nuclear export agency.
