Czech government plans to select nuclear funding model within a year

By bne IntelliNews June 15, 2017

A financing plan for construction of the first of two planned new units at the Dukovany nuclear power plant should be ready by spring next year, Czech Prime Minister Bohuslav Sobotka announced on June 15.

The investor for the project, the first of three new reactors planned under the country’s long-term energy strategy, should be state-controlled utility CEZ or the state, the PM added following a meeting of the state committee on nuclear power. There are three variants regarding how to find the necessary CZK100bn (€3.8bn) or more under consideration, Sobotka added. The final variant should be chosen by the government by the spring of 2018 at the latest, the PM said.

The deadline appears ambitious unless the state takes over the project. A stand-off over the financing of new nuclear units has persisted for at least three years, with little sign of progress. CEZ minority shareholders insist the company cannot make the investment without government support.

Prague has said many times it will not offer power price guarantees. It was just such a statement that saw CEZ cancel an €8bn tender for two new units at the Temelin plant in 2014. However, lobbying to kickstart the construction of the first of the planned new units is bubbling away.

"The committee today approved three priority options, which will be further analyzed and elaborated," Sobotka said, according to CTK. The first option is for CEZ – which is 70% state owned – to carry out the expansion. A second variant would see CEZ put the project into a subsidiary and sell it to the state.

The third solution would be for the state to take over part of CEZ. "This part would then be wholly owned by the state and implement the construction of this block," Sobotka said. 

CEZ CEO Daniel Benes has suggested more than once that CEZ could spin off all of its nuclear assets and sell them to the state. The advantages of a state takeover of the nuclear division would include lower capital costs and lower electricity prices, he said last month.

CEZ is set to place all nuclear-related activities into a new division, local media reported on May 17. The company denied there is any link between the move and the suggestions from the CEO.

However, the situation could yet change dramatically ahead of next spring. Sobotka will not contest elections due in October, and is likely to be replaced by Andrej Babis, leader of the populist centrist party Ano. As finance minister until last month, Babis sought to take a tight grip on CEZ, and clearly has little time for Benes, who is leading the resistance of the company to the government’s demands for new nuclear to be built.

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