The 'new hybrid survey vessel construction project' of the West Sea Fisheries Management Agency has been stalled for over two years. After litigation between shipyards halted the process, the government terminated the contract. However, they have been unable to find a shipyard to take over the construction project due to the subsequent increase in raw material prices and labor costs.
According to the Ministry of Oceans and Fisheries on the 11th, this project was commissioned by the Ministry of Oceans and Fisheries' West Sea Fisheries Management Agency in the second half of 2021. It involves the construction of three 900-ton hybrid national fisheries survey vessels. The vessels can use liquefied natural gas (LNG) and diesel as fuel. The crew capacity per vessel is 23 people. The project cost per vessel is 22.6 billion won, totaling 71.1 billion won including supervision costs.
Originally, the vessel was awarded to J Shipbuilding, located in Mokpo, Jeollanam-do, and was scheduled for completion by January 30, 2024. However, construction was halted following a court order in October 2022. This was due to Y Heavy Industries, a competing bidder, raising issues over J Shipbuilding's violation of direct production standards and filing an injunction to stop the bidding process.
Afterward, the Supreme Court and the government discovered false documents from J Shipbuilding. The Ministry of Oceans and Fisheries terminated the contract with J Shipbuilding in December 2023. The three survey vessels remain in a state of unfinished construction, being held by the West Sea Fisheries Management Agency.
At the time of contract termination, the West Sea Fisheries Management Agency had already paid J Shipbuilding about half of the total project cost, approximately 35 billion won. Subsequently, the West Sea Fisheries Management Agency needed to find a shipyard to complete the construction of the three vessels with the remaining 35 billion won. However, as material and labor costs rose, they could not find a shipyard willing to finish the remaining works for that amount. Even last year, there were four rounds of bidding initiatives, but all were abandoned due to a lack of bidders.
An industry official noted, 'The amount was calculated without considering the rising plate prices and labor costs, along with inflation rates,' adding, 'It seems that no one has bid because it was judged that accepting the order would inevitably lead to losses.'
The Ministry of Oceans and Fisheries stated that based on expert technical consultations from May to September last year and safety verification services from October to December, resuming construction is tentatively deemed possible. However, they believe that the total project cost is expected to increase by 13.6 billion won to about 84.7 billion won from the initial amount of 71.1 billion won. Specifically, an additional 9.7 billion won is needed for rising raw material costs, 2.2 billion won for quality improvements including rust removal from existing materials, and 1.1 billion won for supervision-related expenses.
The issue is the budget. As of January last year, the project ended with the remaining budget disappearing, and this year's budget was allocated '0 won,' making the resumption of construction further away. If the resumption of vessel construction continues to be delayed, there is a possibility that the vessels will be treated as scrap. In that case, the revenue from scrap sales would amount to only 1 billion won.
The National Assembly Budget Office, in its analysis report on the 2025 budget proposal, stated, 'The longer the subsequent processes are delayed, the more corrosion of the existing materials stored outdoors will intensify, making it increasingly difficult to resume construction over time and raising the possibility of scrap disposal.'
It was also mentioned that, 'If the existing materials are disposed of and construction starts anew from scratch, there will be a buried expense of 32.1 billion won (investment costs minus scrap sales revenue),' and explained that 'The three survey vessels need to be constructed from the beginning, leading to additional construction costs and further delays in the commissioning period.'
Meanwhile, while the financial authorities recognize the need for a budget increase, they believe they need to review whether to reflect the budget after the ongoing litigation between Y Heavy Industries and the government is completed. Y Heavy Industries is currently involved in litigation with the government regarding the confirmation of 'preferred negotiation status.' They lost in the first trial.