"Frequent Design Changes in Energy Public Enterprises Increase Construction Costs... Waste of Taxpayer Money"

Assemblywoman Yang Geum-hee's Audit Data... Over 10 Years, 225 Construction Projects with More Than 1 Trillion Won in Project Costs

[Asia Economy Reporter Moon Chaeseok] Energy public enterprises, including Korea Electric Power Corporation (KEPCO), have been criticized for wasting taxpayers' money by inflating construction costs due to frequent design changes during construction processes.

On the 6th, Yang Geum-hee, a member of the National Assembly's Industry, Trade, Energy, Small and Medium Enterprises Committee from the People Power Party, stated based on data received from KEPCO, Korea Hydro & Nuclear Power (KHNP), and five power generation subsidiaries, "Over the past 10 years, there have been 225 cases where project costs increased by more than 500 million KRW due to design changes in construction projects exceeding 3 billion KRW."

According to Representative Yang, from 2010 to this year, the initial contract amount for the 225 projects was 3.8388 trillion KRW, but the actual budget spent on construction was 5.2282 trillion KRW, which is 1.3894 trillion KRW (36%) more.

After the contracts, design changes were made a total of 1,212 times, averaging 5.4 times per project.

By public enterprise, KEPCO had the highest number of design change projects with 108 cases (646 times), followed by Korea Western Power (49 cases, 311 times), KHNP (38 cases, 106 times), and Korea Midland Power (15 cases, 61 times).

The total increased construction cost was highest at Korea Western Power with 453 billion KRW, followed by KEPCO (356.2 billion KRW), Korea Midland Power (251.3 billion KRW), and Korea East-West Power (226.3 billion KRW).

The ratio of design change amounts to total awarded contract amounts exceeded 100% in most cases: Korea Midland Power at 149%, Korea Southern Power at 140%, Korea Western Power at 139%, KHNP at 136%, and KEPCO at 133%.

KEPCO’s 345KV Gunsan-Saemangeum transmission line construction project contracted in 2010 was awarded at 26.1 billion KRW, about 44% of the estimated price, but after 18 design changes, the total project cost increased by more than 80% to 47.1 billion KRW.

Korea Western Power’s Taean Thermal Power Units 9 and 10 mechanical and electrical construction project contracted in 2013 was awarded at 204.2 billion KRW, but after as many as 40 design changes, the final project cost rose by 149.1 billion KRW to 353.3 billion KRW.

KHNP’s Hanul Headquarters water intake facility maintenance project contracted in 2014 saw an increase of 10.4 billion KRW, which is 116% of the initial contract amount of 9 billion KRW, due to design changes.

Representative Yang said, "The durability of energy public enterprise facilities is directly linked to the safety of the public," adding, "Thorough and planned construction management is necessary to prevent taxpayers' money from being wasted due to inflated construction costs."

This content was produced with the assistance of AI translation services.