The government will press ahead with breaking ground on Gadeokdo New Airport this year, even after BS Hanyang said it wants to withdraw from the consortium handling site preparation work. The disputed increase in construction costs will be resolved by amending the special act governing the project, an approach agreed with the builders taking part in the consortium. With regional construction firms now on board, the government plans to move quickly on the revision during the current regular session of the National Assembly to put the project back on schedule.
The Gadeokdo New Airport Construction Promotion Team at the Ministry of Land, Infrastructure and Transport (MOLIT) reached the agreement on the 20th at a second meeting in Osong, North Chungcheong Province, with construction companies from Busan and South Gyeongsang Province that are part of the Daewoo Engineering & Construction consortium. "We secured the cooperation from regional builders that we need to push the special act forward," a ministry official said. "We will work to have it passed as quickly as possible during the regular session."
On the 10.7 trillion won ($7.5 billion) site preparation project, regional builders within the Daewoo Engineering & Construction consortium had demanded an increase of about 620 billion won in construction costs, saying raw material and fuel prices had surged since the tender was announced. They argued that contractors would have to absorb the losses if cost increases incurred before the contract was signed were not reflected. The ministry agreed with the consortium's position and had been reviewing an increase.
The industry had initially called for a revision of the guidelines on total project cost management, a step the government could take quickly on its own. But after consultations with fiscal authorities, the government settled on amending the special act instead. Behind that shift, according to sources, was concern that revising the guidelines would trigger a flood of similar demands for higher construction costs on other projects.
Legislative discussions are under way. Rep. Jeong Dong-man, the People Power Party's floor liaison on the National Assembly's Land, Infrastructure and Transport Committee, is working toward jointly introducing an amendment to the special act with Rep. Bok Ki-wang, the committee liaison for the Democratic Party of Korea. There is also talk of lawmakers from the Busan area signing on. With the government and regional firms now aligned on how to handle the increase, the bill is expected to move faster through introduction and deliberation.
Separately, BS Hanyang, which holds a 5% stake in the consortium, sent a letter to Daewoo Engineering & Construction, the lead contractor, saying it wished to withdraw. "It is true that BS Hanyang sent a letter saying it wants to withdraw," an official at Daewoo Engineering & Construction said. "We have made a verbal inquiry to the Public Procurement Service about what procedures need to be followed."
A total of 19 companies take part in the consortium. Daewoo Engineering & Construction holds the largest stake at 55%, followed by HJ Shipbuilding & Construction and Joongheung Togeon with 9% each, Dongbu and BS Hanyang with 5% each, and Doosan E&C with 4%. The remaining 13% is split among 13 construction firms based in Busan and South Gyeongsang Province. If BS Hanyang withdraws, its stake will be redistributed within the consortium.
BS Hanyang decided to leave the consortium after an internal review concluded that the Gadeokdo New Airport project carried significant risk, according to sources. The ministry's position is that the withdrawal is not large enough to affect the overall project. The government plans to proceed with follow-up steps, including a contract for the initial phase of construction, to start work this year and keep its target of opening the airport in 2035.