CEZ launches second stage talks with Temelin bidders

By bne IntelliNews April 25, 2013

bne -

Czech power utility CEZ told CTK April 23 that it has launched the next stage of negotiations with the two final bidders for expansion of the Temelin nuclear plant, and confirmed that it will press them to improve their offers.

"After the the completion of the assessment and preliminary evaluation of bids at the end of March, initial individual talks with each of the two bidders started on April 3 and 4," CEZ spokesman Ladislav Kriz told CTK. "Further talks were held on April 15-18 and they will continue. About 40 experts from CEZ and each of the bidders took part in the first talks."

US-Japanese company Westinghouse and Czech-Russian Consortium MIR.1200 were left to face off for the estimated CZK200bn-300bn (€7.7bn-11.5bn) project after France's Areva was ejected from the tender after submission of the initial bids. The French company has lodged several appeals against the decision, and although CEZ is allowed to continue with the selection process, it cannot sign a contract until the Czech antitrust office UOHS makes a final decision on the latest complaint. CEZ has said it plans to pick a winner in the autumn.

The competition between US- and Russian-led bids for the huge and strategic project has set up a fierce debate in a country that remembers well its time under communism, but is also struggling with its disappointment with the West as it battles the crisis. However, the major issue for the population is high electricity bills and the widespread suspicion of corruption amongst the higher echelons both inside the state-controlled CEZ and amongst public servants and politicians.

For CEZ, the issue is one of cash. It has shrugged off criticism that the expansion of Temelin is uneconomic, but is lobbying hard for government support. Thus far, Prague has been less than encouraging. The company has also admitted that the project will stretch it to the limits financially, and has said it will need to halt all other major plans in order to fund it itself. CEZ said late last year that after making a final decision on the tender, it may look for a strategic partner for the project.

That situation is thought to offer the Russian bid the upper hand. State nuclear agency Rosatom essentially heads the bid, and the consortium has said it is ready to offer full financing for the project. Export of nuclear technology is practically the only successful element in the Kremlin's drive to wean the Russian economy off raw materials exports and replace them with high tech offers.

CEZ is pledged by contract not to disclose confidential information from talks with the bidders. At the end of March, the Czech company completed a preliminary evaluation of the bids, but did not release their ranking. Both Westinghouse and Consortium MIR promptly announced their bid was leading the race.

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