April 13, 2017 12:26
The government is considering paying more money than agreed to the Chinese company that raised the sunken ferry Sewol because the work was much tougher than expected.
According to a senior government source on Wednesday, the Ministry of Oceans and Fisheries wants to compensate Shanghai Salvage for additional costs somewhere in the region of W30-40 billion, but below W50 billion (US$1=W1,140).
The company is originally contracted for W91.6 billion. Initially the price was set at W85.1 billion, but that increased to reflect the cost of setting up safety nets around the wreck to keep crucial pieces of evidence from being washed away.
But as the salvage operation dragged on longer than planned, the company's costs swelled to W28 billion as equipment rent and staff wages rose. Shanghai Salvage's director Hong Chong recently said the company borrowed US$100 million from a bank.
The company asked the ministry to cover the additional costs, saying the warped hull plus unexpected underwater conditions caused a four to five-month delay. For instance, it expected to take around two months to insert the lifting beams under the ferry, but it actually took five months because it meant drilling through the tough bedrock.
The ministry decided to accept the request since the problems were due to unexpected natural causes.
Shanghai Salvage is also tasked with underwater searches around the wreckage, which entitles it to billions of won in extra payments. A ministry official said, "The basic aim is to compensate the company for a portion of additional expenses due to delays." The official added the exact amount will be decided after further discussions with budget officials.
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