CEZ seeks strategic partner for Temelin expansion

By bne IntelliNews May 10, 2012

Tim Gosling in Prague -

Struggling to find the cash to fund its ambitious bid to expand the country's nuclear power capacity, Czech power group CEZ said on May 9 that it will launch a tender to select a strategic partner to help it with the €8bn project to build two new units at the Temelin nuclear plant. The announcement will have bidders on the construction contract scrambling.

"Energy company CEZ, within the framework of its preparations for the completion of the Temelin nuclear power plant, is checking out the possibility of the entry of a strategic partner," the near 70% state-owned company said in a statement.

The move will clearly affect the fight between US company Westinghouse, France's Areva and Russia's Atomstroyexport over the CZK200bn construction tender for the project. The high-profile and politically charged process is due to be decided by the end of 2013, with final bids due on July 3. However, a major thrust of those bids will now presumably need to include offers to join CEZ in funding and operating the plant.

Regardless, the Czech utility suggested it will run a separate tender for the role of project partner. CEZ says possible cohorts have sounded it out and, if it appears to be the logical step, an eventual partner will be selected via a "transparent" tender.

The company has already had one offer of strategic partnership from the Russian bidder for the contract, with Atomstroyexport stating in March that it is ready to offer full funding for the project, and consider any type of strategic partnership, including one that would see it become an shareholder in CEZ itself.

In contrast, both Areva and Westinghouse insist they are nuclear power companies not banks, leaving the Russian offer the only one to include financing for the meantime, reports Czech Position. "[The Russian consortium] must probably buy what they cannot win," Areva's regional director Thomas Epron told the website on May 9.

The Czech company has previously indicated it could look for a financial partner for the Temelin expansion, as well as some form of government guarantee. Despite the admission that it may seek a strategic partner, it once more refuted suggestions that the project is economically unviable and that it would struggle to find the cash. "CEZ is prepared to fund the project using its own resources and available debt capacities; however, there are many other interesting investment opportunities, which the CEZ Group might reach if a strategic partner joins the consortium," CEZ CEO Daniel Benes said in the statement, reports Reuters.

"The initial market analyses show that it is possible to invite more than 10 energy companies, most of which are based in Europe, which either have already shown interest or may become interested in negotiations about such partnership," the missive added.

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