Czech officials continue pushing case for new nuclear tender

By bne IntelliNews July 18, 2014

Tim Gosling in Prague -


Senior Czech officials have hinted strongly for the second time in as many weeks that utility CEZ is to swiftly restart its efforts to expand the country's nuclear capacity after cancelling a tender for two new units at the Temelin plant in April. Meanwhile, discussions with South Korea over joining any new tender continue.

In particular, its notable that Finance Minister Andrej Babis is leading the charge, given that he effectively took the reins at the state-controlled CEZ in June. Previously, his Ano party was one of the main opponents of any government support toward the project that had been requested by CEZ. The company scrapped the €10bn tender when the new coalition government made it clear it would not offer guaranteed prices for the power produced by the planned addition of two new blocks.

Following up comments made on July 8, Babis made even more explicit remarks backing nuclear expansion in an interview with business weekly Ekonom published on July 17. The finance minister stated that the Czech Republic needs more nuclear power, given that natural gas is not an alternative power source, and that coal reserves should be left in the ground for future generations, according to Radio Praha.

His comments came just a day after Trade and Industry Minister Jan Mladek confirmed that the government views nuclear expansion positively. The country will probably build one reactor at Temelin and one at the Dukovany plant in the future, he told a press conference.

However, it will be Babis that decides. The trade minister's Social Democrat (CSSD) party, which - nominally at least - leads the governing coalition, was incensed last month when Babis took control of the CEZ supervisory board. The billionaire filled the company's seats with members of Ano, which continues to outstrip the largest party in the coalition, the Social Democrats, in the polls.

The latest comments from the increasingly powerful Babis back up his words on July 7, suggesting preparations for a new tender are already underway. CEZ must make a decision on the project by the spring, he told Bloomberg then, insisting the company must do its "homework", as the government expects to approve a long-term energy strategy before the end of 2014. "Two blocs certainly need to be built," the finance minister said. "This has to be planned 20 years ahead of time because of the lifespan of nuclear power plants." 

In the latest interview, Babis is already delving into the details of how a deal could be structured. He suggested a Public-Private Partnership could be the way to go. Another option would be for the expansion to be a joint investment with a private investor. Of the bidders in the last tender, only Russian state nuclear agency Rosatom said it was ready to invest in the project. 

Rosatom has been sniffing around Central European nuclear assets for some time. Early this year, it sealed the contract to expand Hungary's Paks, in a deal greased by a €10bn loan from Moscow to Budapest, and is reported to be keen on buying into Slovakia's dominant power producer Slovanske Electrarne, which is in the midst of expanding the Mochovce nuclear plant.

However, with the EU and Central Europe wary of Russian involvement in the energy mix, the Czechs appear to be increasingly turning an eye to the east. As the Temelin tender was cancelled in April, President Milos Zeman called for a new competition to be set up immediately. He also suggested South Korea would be interested should that happen. 

The same day that Babis spoke to Bloomberg, officials in Seoul announced the government had "decided to join the bidding" on the Czech nuclear project, according to the Korea Times. "Chances are high that [state utility] KEPCO will win the rights," energy ministry official Chae Gyu-nam said. "The Czech government was very interesting in bringing Korea into the bidding process. "

Babis pushed Seoul's case again on July 17, a day after Prime Minister Bohuslav Sobotka held talks in Prague with South Korean Foreign Minister Yun Byung-Se, which local media report covered the opportunities for South Korean participation in the Czech nuclear sector.

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