Czech court bans CEZ from signing contract with Temelin winner.

By bne IntelliNews October 23, 2013

The Czech Regional Court in Brno issued a preliminary injunction preventing Czech energy group CEZ from signing a contract with the winner in a USD 10bn tender to expand its nuclear power plant Temelin, CTK news agency reported.

The court’s ruling follows a complaint by France's Areva that protested against its exclusion from the tender. In October 2012 CEZ disqualified Areva’s bid saying it failed to meet requirements of the tender that envisages the construction of two more reactors at the plant. Areva filed a request with the Czech anti-monopoly body UOHS to suspend the tender but UOHS rejected the appeal. Areva, which then asked the court to halt the tender, welcomed the ruling of the Brno court and said that it want to get back into the tender as it believes its exclusion violated the Czech laws.

The injunction will not delay the tender as CEZ has already put off the deadline to select the winner citing uncertainties in the future state energy strategy following the collapse of the Czech government in June.

The exclusion of Areva has left two bidders in the race - US Westinghouse and a Czech-Russian consortium comprising Skoda JS, Atomstroyexport and Gidropress. CEZ initially planned to select the winner by end-September but now it expects to make a decision on the project at end-2014 or in 2015.

Under CEZ’s initial plan, the size of the 2,000MW Temelin plant should be doubled with the new units, projected to start operations in 2025. This would be the biggest ever energy project in the central European country and its funding represents the biggest question facing the company. CEZ, majority owned by the state, has said it wants to secure a deal with the government about guaranteeing future prices for electricity generated by the new blocks so that the project proves profitable. It has not yet decided whether it will finance the project alone or will seek an investment partner.

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. The future of the project depends on the government that will be formed after the Oct 25-26 early elections likely to be won by the main centre-left Social Democrats (CSSD). Milan Urban, the shadow industry minister of CSSD, has said earlier this month that his party is supporting Temelin expansion but will not back state guarantees for Temelin prices.

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