[Exclusive] Electric Power Public Enterprises Inflate Construction Costs by 4 Trillion Won

Low-Bid Contract Followed by Frequent Design Changes 'Trick'
43.08 Trillion Won Increase in Construction Costs Over 361 Projects in 11 Years

[Sejong=Asia Economy Reporter Kwon Haeyoung] It has been revealed that Korea Electric Power Corporation (KEPCO) and other electric power public enterprises have inflated construction costs by more than 4 trillion won over the past decade by frequently changing designs after signing construction contracts through low-price bidding. While there are claims that construction periods inevitably extend due to regulations or defects, there are also criticisms that internal increases after construction approval may have exploited loopholes that do not require or easily bypass board resolutions. Given that KEPCO’s main source of income is the electricity fees paid by the public, it is expected to face criticism for wasting taxpayers’ money.

According to data submitted by KEPCO, its five subsidiaries, and Korea Hydro & Nuclear Power to Rep. Yang Geum-hee of the People Power Party on the 28th, among construction projects worth over 3 billion won started since 2010, there have been a total of 361 cases where construction costs increased by more than 500 million won due to design changes.

The initial bid amount for these projects was 10.8532 trillion won, but a total of 1,939 design changes were made during the construction process. As a result, the final construction cost increased by 4.308 trillion won to 15.1612 trillion won, a 40% increase. On average, for one project costing 30 billion won, designs were changed about 5.2 times, increasing expenditures to 42 billion won.

Electric power public enterprises argue that construction costs inevitably increase due to unexpected regulations or defects. A public enterprise official explained, "If defects occur during construction or additional maintenance is required, the construction period may be extended, and if regulatory requirements are strengthened, construction costs may increase. Although frequent design changes after construction start are not desirable, they are sometimes unavoidable." However, there are also criticisms that the design changes exploited the fact that, according to each company’s internal regulations, certain conditions allow changes to be approved internally without higher-level approval.

Rep. Yang Geum-hee stated, "Electric power public enterprises are inflating construction costs through design changes and wasting taxpayers’ money," and emphasized, "Thorough and planned construction management is necessary."

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