Czech energy group CEZ will seek compensation worth billions of koruna from supplier Skoda JS for unplanned shutdowns at the Dukovany nuclear power plant, local media reported on June 27. The news sent CEZ shares up 3.18% in morning trade.

Production at three of Dukovany’s four reactors was suspended last year due to problems with pipe welds. The outages provided a drag on the country’s industrial production and economic growth, while the impact on the profitability at the state-controlled company has caused no little political fuss. It was suggested that senior management, including CEO Daniel Benes, could be forced out.

The problems have lasted longer than initially planned, eating into earnings of one of CEZ’s most profitable plants. The utility - in which Prague holds 69% - claims they cost it CZK 2.5bn losses last year.

CEZ has now launched proceedings against Skoda JS seeking CZK3.5bn, which covers damages suffered last year and this, Cesky Rozhlas reports. Skoda JS, owned by Russian corporation OMZ, is CEZ's main supplier of nuclear maintenance services. Skoda JS recruited small Czech firm Tediko to carry out X-ray checks on pipes at the plant, which were later found to be flawed. Skoda JS denies wrongdoing.

Suing Skoda JS for damages is a logical step for CEZ because the subcontractor Tediko is too small for CEZ to recover any material damages, Wood & Co suggests in a note.

“JS Skoda probably has access to cash (it generates revenues of c.CZK3bn/year, and has recourse to its Russia owner) to pay the c.CZK2.5bn (c.CZK 5/share) in lost earnings that CEZ incurred in 2015 due to the outages. Similar losses for 2016E are expected to be in the neighbourhood of CZK2bn,” the analysts note.

“It is hard to estimate the outcome of a potential dispute, but any compensation would be positive,” analysts at Komercni Banka said in a note.

Should CEZ manage to win the entire amount of CZK3.5bn “it would be a one-off income of about CZK6.5 per share,” J&T Bank analysts calculate. That would strongly affect the company’s net profit, they add. CEZ targets full-year profit of CZK18bn in 2016.

However, the J&T analysts caution that the compensation process is not certain and may take a long time, while there are bigger issues facing the likely performance of the company. “CEZ's share price should, in our opinion, in the near future be mainly affected by the overall market sentiment and price developments of German electricity.”

CEZ shares rose 3.18% to trade at CZK408.6 in morning trade on the Prague Stock Exchange.