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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] In an exclusive report, Edaily said Hyundai Engineering & Construction (Hyundai E&C) has begun procedures to dissolve its Georgia subsidiary established for the Nenskra Hydropower Project, as prolonged delays have clouded the future of the development.
According to the Edaily report on Tuesday, Hyundai E&C’s board approved a resolution in October last year to close its branch office in Tbilisi, Georgia. The subsidiary had been set up in 2019 to carry out the Nenskra hydropower project led by Korea Water Resources Corporation (K-water).
The 280-megawatt hydropower plant was structured under a Build-Operate-Transfer (BOT) model, under which the plant would be operated for 46 years before being transferred to the Georgian government. Initially scheduled for groundbreaking in 2015 and completion by the end of 2020, the project has yet to commence full-scale construction.
In 2019, a joint venture between Hyundai E&C and Turkish construction firm Limak won a $737 million turnkey contract from project developer JSC Nenskra Hydro. Hyundai E&C’s share of the contract was approximately $332 million, accounting for about 45%.
Industry sources say the chances of the project being revived are slim, citing unresolved local compensation disputes, cost escalation due to the COVID-19 pandemic and surging raw material prices, as well as concerns over project management.
K-water has also reportedly faced criticism for failing to secure sufficient guarantees on advance payments to contractors, leaving around $8 million potentially unrecoverable. The project has generated annual operating losses and significant impairment losses, with cumulative investment reaching KRW 239.4 billion while the book value has fallen sharply.
With the main contractor now stepping back, industry observers warn that the outlook for the Nenskra Hydropower Project has become increasingly uncertain.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
