Czech regulator approves expulsion of Areva from nuclear bid

By bne IntelliNews February 26, 2013

bne -

The Czech anti-monopoly office (UOHS) ruled on February 25 that the decision of utility CEZ to exclude France's Areva from the tender to build two new units at the Temelin nuclear power plant is legal. The finding potentially opens the way for a final decision on the contract, although Areva has promised a fresh appeal.

The competition watchdog announced that the state-controlled CEZ did not violate public procurement law by excluding Areva's bid for the contract, which is understood to be worth up to €8.5bn. The French company, whose pricy EPR reactor was also ousted from a Finnish nuclear tender the same day, said it fully intends to appeal.

CEZ excluded Areva from the tender process in October, claiming serious shortcomings in its bid. Neither party has disclosed details of the objections, but Areva immediately launched a bid to halt the process. The latest decision appears to leave Toshiba's US unit Westinghouse to fight it out with a consortium led by Russia's Atomstroyexport for the contract.

UOHS chairman Petr Rafaj told CTK that the regulator has now halted the administrative proceedings against CEZ's decision, which had put the tender on hold. In response, Areva said in a statement that it intends to challenge the UOHS decision, file a remonstrance with Rafaj, and, if necessary, will apply to the Czech courts.

"Areva announces its intention to appeal the first instance decision by UOHS on its expulsion from Temelin tender," the French company said, adding that it "considers this decision based on insufficient analysis and documentation."

Unsurprisingly, CEZ welcomed the UHOS announcement, whilst claiming that it would prefer it if the French bidder had kept to the rules of the tender. "The exclusion of Areva came as an unpleasant surprise to us but we had to follow the law. It would be a better position for us if all the three bidders were still in the tender process," spokesman Ladislav Kriz said. "We did not expect the UOHS to have possibly come to another conclusion since we are confident that the course of action we have taken was under the rule of law," he added.

In fact, the UHOS decision is an important step towards freeing CEZ to push the process forward. While CEZ can continue to work with the remaining bidders, and even select a winner, it cannot currently sign a contract due to an injunction placed by UHOS. The decision of the regulator on the public procurement objection placed by Areva will remove that block, should the French group's promised appeal fail.

CEZ has said that it would like to make a final decision on the winner of the tender by September, and sign a contract by the end of the year. Lawyers quizzed by CTK suggest Areva's appeal and subsequent action could extend the process for another eight months or so. CEZ hopes to begin construction at Temelin in 2016-2017, with the project to be completed by 2025 at the latest.

Analysts at Erste Bank say that while the French company's objections are annoying for CEZ, it has bigger fish to fry on the contentious project, the economics of which have been questioned, and the funding of which is set to seriously challenge the company's resources. "While Areva's protests can delay the tender... we see the development of electricity prices on the market and CEZ's negotiations with the state regarding possible support as more important," they write.

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