Rosatom still in running for Czech nuclear tender

By bne IntelliNews May 5, 2015

By Robert Anderson in Prague -


When the Czech Republic launches a tender to build new nuclear power generation capacity, it should not exclude Russian companies from participating, according to Economy Minister Jan Mladek.

“Nobody will be excluded ex ante,” Mladek told a briefing for foreign journalists on May 4 in answer to a question about Russian participation in the tender, which is expected next year.

However, the Social Democrat minister - a critic of sanctions against Russia - admitted that there were cabinet “voices” who wanted to exclude Russian companies, and he appeared to cast doubt on their chances of winning. “I have doubts that other companies can be the winner,” he said.

Allowing Russian companies to compete would be extremely controversial, if sanctions were still in place when the tender is held. Neighbouring Hungary has been strongly criticised for awarding a contract to expand its Paks nuclear plant to Russian group Rosatom in January 2014 without a tender, and the deal is currently being investigated by the European Commission

The Czech Republic's two nuclear plants currently run a total of six reactors that generate a third of the country’s electricity. That share is to increase to at least 50% in the future, according to government targets, in order to maintain security of supply – and make the country more energy independent – when the country’s ageing coal-burning plants eventually close as lignite supplies dwindle. 

CEZ, the majority state-owned power utility, called off a tender in April 2014 to build two more blocks at the Temelin nuclear power station because of the lack of a state guarantee on the energy purchase price. Rosatom and Westinghouse, the Japanese-owned US group, were the remaining bidders, after Areva of France was excluded because of alleged faults in its bid documents

Following the EU’s clearance of UK state support for the construction of Hinkley Point C last October, the Czech government is looking to reopen the tender, though the EU has warned that each case will be treated on its merits.

As well as Rosatom and Westinghouse, Mladek reiterated that Korea Electric Power Corporation (Kepco) and several Chinese groups had also expressed interest in building the blocks, though none of them had yet won a EU licence to do so within the European Union. He also expressed hope that Areva would re-enter the process.

Finance Minister Andrej Babis, who leads the junior governing party Ano, has called for the new tender to be held next year. Mladek said approval of the government’s new energy strategy and nuclear action plan had been delayed by a dispute over expanding the area for open-cast lignite mining, but he expected a cabinet decision by the summer.

This would enable an environmental impact analysis to be carried out at Dukovany, site of the country’s other nuclear power station. Temelin, which has already gone through this process, and/or Dukovany are being considered for the two new blocks.

However, Mladek admitted that there was still discussion on several key issues, notably the question of guarantees and the kind of entity that would construct the new blocks. “We are not very enthusiastic about guarantees,” he said. “At the moment there is a discussion.”

Mladek said Babis, whose ministry holds the CEZ shares, wants the utility to go ahead on its own, without state support. But Mladek argued that if the contractor could be persuaded to co-finance construction – which is not a given – CEZ would still be unlikely to go ahead without state support.

He pointed out that if CEZ created a majority-owned daughter company to build the blocks, with the remaining shares held by the contractor, it would still have to consolidate the unit (and its liabilities) into its group accounts.  

“I do not share the optimism of Mr Babis that they will do it on their own,” he said.

Mladek said he preferred a second option, where the state would create a wholly-owned company to build the blocks. A third option could be a consortium of CEZ, the contractor, and energy customers, he said.

He also indicated that expanding Dukovany had become the priority, rather than Temelin, because the old blocks there would have to be decommissioned by 2037 and the local mayors were campaigning for it to be replaced.

By contrast, Temelin has always been controversial because of its closeness to the border with non-nuclear Austria, and the blocks there have a longer lifespan. Alternatively, one block could be built at both Temelin and Dukovany.

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