Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Czech PM outlines nuclear expansion with state control over construction

Published 2019-02-21, 07:12 a/m
Updated 2019-02-21, 07:20 a/m
© Reuters.  Czech PM outlines nuclear expansion with state control over construction

© Reuters. Czech PM outlines nuclear expansion with state control over construction

By Robert Muller

PRAGUE, Feb 21 (Reuters) - Czech Prime Minister Andrej Babis on Thursday outlined the government's plan to build a number of nuclear reactors, saying the state should control construction so it can halt the expansion should power prices fail to support the project.

The government expects to sign a contract with majority state-owned CEZ CEZP.PR to build one or more new reactors at Dukovany, with a tender towards the end of 2020 and a supplier chosen by 2024.

Babis said the government would not provide CEZ an unlimited state guarantee and that the utility would cover any extra costs not generated by the state or foreign regulators.

"The basic aim of the state should be to take control of construction of new nuclear capacity," Babis told a nuclear conference. "The state would get such control by signing a contract with CEZ on construction."

"It is simpler and more favourable for customers than state guarantees, which would in fact amount to a blank cheque."

The government has been considering how to fund a multi-billion-dollar expansion of CEZ's nuclear power plants, before some units reach the end of their lifetime.

CEZ has balked at starting a tender without receiving state guarantees but Babis has said the company, Central Europe's largest listed utility, can handle the project itself.

"It is necessary to start the first stage immediately ... to get building permission at the Dukovany site and to organise the tender," Babis said.

"The state ... will have an option to make appropriate decisions on whether to continue or stop the planned construction in case the resulting consumer electricity price is at an unacceptable level."

Some minority shareholders fear nuclear expansion through reactor construction would dent dividend payouts if CEZ were pushed to finance it on its own. The company could face shareholder lawsuits.

But CEZ Chief Executive Daniel Benes told the conference the best model for the expansion had not yet been determined and that any plan must not harm minority investors.

"The contract has to be construed in a way not to harm the minority shareholders," he said.

In 2014, CEZ scrapped a previous plan to expand nuclear capacity after failing to receive state guarantees on power prices.

This time, firms from countries including Russia, China and the United States are set to vie for the project, which marks the country's largest-ever tender.

The six potential bidders are China's CGN, Atmea - a joint venture between Mitsubishi Heavy Industries 7011.T and EDF Group EDF.PA - Westinghouse, South Korea's KEPCO 015760.KS , French state-owned Areva and Russia's Rosatom.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.