Czech CEZ delays deadline for choosing winner in Temelin nuclear expansion tender.

By bne IntelliNews July 3, 2013

CEZ, the Czech Republic’s largest power producers, has put off the deadline for announcing the winner in a USD 10bn tender to enlarge its nuclear power plant Temelin amid rising political uncertainty and fears about the effectiveness of the project.

CEZ was initially expected to choose supplier for the two new reactors by end-September and sign the binding contract by the end of the year but it said on July 2 that talks with the two bidders – US Westinghouse and a Russian-Czech consortium led by Rosatom – will continue in September and October. “The overall duration of our negotiations with the bidders will depend on how fast the standpoints of the bidders will come close to CEZ’s requirements,” CEZ spokesman Ladislav Kriz said in a statement on the company’s website. It is not clear whether CEZ will select the winner by the end of the year.

The project’s delay is in line with market expectations since after the collapse of the centre-right coalition government of Petr Necas last month amid a bribery and spying scandal, President Milos Zeman appointed a caretaker cabinet that does not have the political mandate to decide on the tender.  

Doubts about the project’s feasibility are also growing given the record-low wholesale electricity prices in Europe. In a recent interview for Reuters, CEZ chief financial officer Martin Novak said the company should secure a deal with the government about guaranteeing future prices for electricity generated by Temelin’s new blocks so that the project proves profitable. CEZ seeks the introduction of the British model under which the state steps in with payments if the power prices slip below the guaranteed level but CEZ will have to pay the state if prices are higher. Outgoing industry and trade minister Kuba has said that the ministry is considering such a system only for a limited period of time.

The Temelin tender, which aims to boost the share of nuclear power in the Czech power mix to 50% by 2030, is closely followed by nuclear equipment suppliers that were hit by decreasing power prices and weakening interest in atomic energy since Japan's Fukushima disaster in 2011.

 

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