International Cooperation Team

Technology Policy & Strategy Department

Korea Hydro & Nuclear Power Co.(KHNP)

Managing the supply chain:

Challenges and Overcoming in Korean

nuclear industry

TM on Topical Issues in the Development of Nuclear Power Infrastructure

4-7 February 2014, Vienna, Austria

Supply Chain in Nuclear Industry

Challenges and overcoming

The Table of Contents

Supply Chain in Nuclear Industry

Operation

Construction

Planning

23 Units

5 Units

6 Units

20,716MW

6,600MW

8,400MW

Operation : 6 units

Operation : 6 units

Construction : 2 units

Planning : 2 units

Operation : 5 units

Construction : 1 units

Operation : 6 units

Construction : 2 units

Planning : 4 units

Seoul

Hanbit NPP

Kori NPP

Wolsong NPP

Hanul NPP

2

: 5th & 6th New site Samcheok

Yeongdeok

Status of NPPs in Korea

(28.2%)

(28.0%)

(23.8%)

20,716MW

(39.0%) (24.7%)

(27.0%)

138,784GWh

Coal

Gas (8.5%) Oil

(11.4%) Others

Coal Gas

(5.8%) Oil

(3.5%) Others

Others: Hydroelectric, Renewable, etc. Others: Hydroelectric, Renewable, etc.

Source : KEPCO(Dec.2013)

Nuclear power is used as a base load

5

Electricity Mix

31

Kori 1,2,3,4 / Shin-Kori 1,2 Hanbit 1,2,3,4,5,6

Wolsung 1,2,3,4 / Shin-Wolsung 1 Hanul 1,2,3,4,5,6

6

Operating Plants

Construction Planning

UAE May 2017 May 2018 May 2019 May 2020

APR1400

Apr. 2017 Apr. 2018 Jun. 2021 Jun. 2022 Shin-Hanul

Shin-Wolsong

Aug. 2014 Sep. 2014 Dec. 2019 Dec. 2020 Dec. 2023 Dec. 2024

APR1400 APR1400 APR+

Shin-Kori

KOREA

Shin-Kori 3 Shin-Kori 4 Shin-Kori 6 Shin-Kori 5 Shin-Kori 7

Shin-Hanul 3 Shin-Hanul 4 Shin-Hanul 1 Shin-Hanul 2

OPR1000

Shin-Wolsong 2

Jul. 2014

UAE 1 UAE 2 UAE 3 UAE 4

Shin-Kori 8

APR1400 APR1400 APR1400

APR1400

APR1400 APR1400 APR1400

APR+ APR1400

APR1400

4

7

Construction Plan

National Networking for NPPs

Nuclear R&D Institute

R&D of Nuclear technology

Development of new technology

Government & KHNP

Nuclear policy and promotion

Planning of nuclear Power

Enactment of Nuclear Power

Regulatory Authority

Licensing & inspecting NPP

Regulatory guide

Industries

Construction, design & A/E

Manufacturing of component

and equipment

Manufacturing of nuclear fuel

Utilities

Operation and maintenance

Construction management

Fundamental for industries

Society & Associations

• Korea Nuclear Society(KNS)

• Korea Atomic Industrial Forum(KAIF)

• Korea Nuclear Energy Promotion Agency

Universities

Education in Nuclear Engineering

Education in Science & Engineering

B.S., M.S., Phd of Nuclear Engineering

Supply Chain for NPPs

KHNP NSSC

Start-Up

KEPCO E&C

NSSS T/G FUEL BOP

DOOSAN DOOSAN KNF DOMESTIC &

FOREIGN CONSTRUCTORS KHNP

A/E Equipment

Supply Construction

NSSC: Nuclear Safety and Security Commission

KEPCO E&C : KEPCO Engineering & Construction

DOOSAN : DOOSAN Heavy Industries Co.

KNF : Korea Nuclear Fuel Co.

CONSTRUCTORS : HYUNDAI, DAEWOO, SAMSUNG,

DOOSAN, DAELIM, etc.

Organization for Project Management

Challenges and overcoming

Fukushima Accident

Safety Culture Issue

Counterfeit Certificates

Corruption Scandals

Challenges in the Nuclear Industry

Safety Culture Issue

Cover-up of SBO at Kori #1

Event

Station Blackout for 12 minutes in a cold shutdown in Feb. 2012

Not to report the loss of power and classify an emergency

Safety Culture Breach

Decision by the station manager not to report and instead to delete record of the event

Prevention measures

24 Hours Monitoring System by the regulatory body

Reinforcement of safety culture and reporting system

IAEA’s Expert Mission to review the SBO

Safety culture advisory service by foreign third party

CGID Issue

In November 2012, KHNP confirmed that some suppliers had supplied items

by falsifying the foreign dedication entities' quality certificates for Commercial

Grade Items Dedication(CGID), such as fuse, relay, diode, etc.

Counterfeit Quality Certificates

Counterfeit Quality Certificates

CGID Issue

KHNP shut down Hanbit #5, 6 to replace the components

with the forged quality certificates

NSSC formed the government-civilian joint investigation team

which investigated falsification of certificates of the items supplied to KHNP

Comprehensive inspections expanded to all Q-class QVD(Quality

Verification Document) of the items supplied to KHNP over the past 10 years

for all of the Korean NPPs while investigating certificates for CGID

All parts with falsified certificates were replaced and NSSC gave permission

for the restart of the NPPs after safety check in January 2013

CGID Issue

KHNP

① Purchase Order

④ Delivery

KHNP

Supplier Dedication

Entity

② Request for

Dedication

③ Notification

of Result Forged

Counterfeit Quality Certificates

EQ Issue

In May 2013, It was found that the falsification of equipment qualification(EQ)

certificates of control cables supplied to Shin-Kori #1, 2, 3 ,4

and Shin-Wolsong #1, 2

Safety function verification in severe environment such as LOCA, Fire,

Melting accident, etc.

Test results in the EQ were falsified by local certified testing institutes.

KHNP immediately shut down affected NPPs to replace related parts

NSSC’s investigation was expanded to all NPPs’ certificates for EQ

The component with falsified certificates were replaced or retested.

NSSC permit restart of the plants in January 2014

Counterfeit Quality Certificates

Counterfeit Quality Certificates

EQ Issue

KHNP

Supplier

① Purchase Order

Testing

Institutes

② Request for

Qualification

③ Notification

of Result

KHNP

Forged

Verification

Agency

⑤ Approval

of Result

④ Request for

Verification

⑥ Delivery

Tolerated

Testing

Institutes

EQ Issue

Counterfeit Quality Certificates

EQ Issue

Counterfeit Quality Certificates

Scope Counterfeit Items

CGID • Forged Quality Certificate

• buzzer, diode, transformer

• power supplier, switch, fuse

• relay, rectifier, magnetic contactor

• pressure gauge, blower

QVD

• Reuse of past Certificates

• Issue of Fraudulent Certificates

• Changing Test Results

• pully, fan, motor

• pump, bushing, nut, bolt

• heater, tool set

• sleeve, actuator

• filter, valve disk

EQ

• Changing Test Results

• Changing Test Condition (Boric

Solution → Normal water)

• Changing Test Report of Laboratory by

Supplier

• control switch module

• control rod position transmitter

• radiation monitoring sensor

• AHU

• 600V control cable

• fuel tank

Counterfeit Quality Certificates

The investigation began after a tip-off from a citizen in September 2011

Prosecutor's Office launched investigation on corruption related

to nuclear power plant items

Vendor, test institute, verification agency, and KHNP has been implicated

The main cause was the disadvantage when the supply was delayed

Prosecutor's Office and NSSC collaborated in reviewing the safety

of nuclear power plants and confirmed that there was no item directly

related to safety

As a result of the investigation, 97 persons were prosecuted on a charge of

corruption

Corruption Scandals in supply chain

Strengthening quality control system

Establishment of a procedure for monitoring quality control by a third party

Reinforcement of legal liability of quality accreditation organizations

Introduction of NPP equipment certification management institution, etc.

Improving procurement system

Strengthening Independence of procurement department in KHNP

Enhancement of bidding system transparency

Organizing a committee to improve NPP procurement, etc.

Eradicating corrupt relationship

Prohibiting the re-employment of retirees in nuclear related companies

Hiring outside personnel in KHNP, etc.

① Strengthening quality control, ② Improving procurement system

③ Eradicating corrupt relationships in supply chain

Prevention measures

Not to be overconfident and complacency

Excellent performance of NPP operation for long period of time

Export of a NPP at the first time in Korea’s nuclear history

To be transparent and open in quality and procurement activities

Nuclear industry is easy to be closed due to the nature

To encourage anonymous reporting

The counterfeits and scandals was revealed by an anonymous tip-off

To cooperate with international agencies, WANO, IAEA and foreign companies

IAEA Expert Mission, WANO Corporate Review, Third party inspection

lessons learned

• Safety culture

• Equipment Reliability

• Engineering Competency

• Organization

• Personnel management

• Corporate culture

• Quality control

• Procurement system

• Corruption prevention

Innovation Integral System Safety First Policy

Public Trust Restoration & High Performance

Strategy to overcome

Korea Hydro & Nuclear Power Co.(KHNP)

Thank You!