Dukovany deal signed

Korea Hydro & Nuclear Power (KHNP) and ČEZ subsidiary Elektrárny Dukovany II (EDU-II) finally signed the engineering, procurement & construction (EPC) contract for new units at the Dukovany NPP in the Czech Republic hours after the Czech Supreme Administrative Court (NSS – Nejvyšší Správní Soud) annulled a lower court injunction that had stalled the project. The two companies signed the pre-prepared contract by email as soon as the Brno District Court’s injunction was dismissed by the NSS.

In July 2024, a South Korean consortium led by KHNP was selected EDU-II as the preferred bidder for the construction of up to four new NPP units at the Dukovany and Temelín NPP sites, with two reactors (units 5&6) confirmed for Dukovany. KHNP won the tender against both US Westinghouse and France’s EDF. Both companies appealed to the Czech competition authority (UOHS – Úřad pro Ochranu Hospodářské Soutěže) about the selection process. Westinghouse later withdrew its appeal and EDF’s was rejected by UOHS in April. The Czech authorities then scheduled the contract signing for 7 May, but on 6 May the Brno Court, acting on a new complaint by EDF, ruled that the contract could not be signed until EDF’s complaint had been dealt with. That complaint is due to be heard on 25 June.

EDF alleges that the KHNP offer price and the inclusion of a guarantee that the construction would not be delayed or become more expensive, would be “unfeasible without illegal state aid given the prices in the nuclear industry” and that if KHNP had state support it would breach European Union rules. The European Union is conducting a preliminary review “to assess whether potential foreign financial contributions received by the Party (KHNP) constitute foreign subsidies and, if so, whether those foreign subsidies distort the internal market with respect to the project”.

However, KHNP said the NSS decision “reaffirms the integrity and transparency of the Czech Republic’s tender process”. Earlier, EDU II said the tender for the supplier of the new nuclear units “was carried out in all phases in a fully transparent manner and under fair conditions”. The Czech government says that according to the “expert opinion of the Ministry of Industry and Trade, the EPC contract with the company KHNP was not subject to the Regulation on Foreign Subsidies. This was due to both the nature of the contract and because the tender procedure had been initiated before the effective date of that Regulation.

Czech Minister of Industry & Trade Lukáš Vlček told Radiožurnál that it was important to sign the contract as soon as NSS lifted the injunction. “That window of opportunity may not have been open for long. Of course, the unsuccessful French EDF will not give up…. It’s a tough fight and those elbows are really very sharp, so there was no reason for us not to just take advantage of that window.”

He added: “We are building a nuclear power plant, the largest project in the history of the Czech Republic, so there really are a few more potential risks. Let’s not be naive about it. We must systematically, patiently, overcome individual obstacles step by step, as we have done so far.”

He listed possible obstacles including the European Commission which is expected to launch an in-depth investigation into the project. “There is still a dimension of the European Commission, but we are now legally in a situation where, for example, even if the European Commission were to open an in-depth investigation, it no longer can affect the signature [of the contract].”

Vlček also raised the possibility of demanding compensation from EDF for the delays. “If someone is wrongly delaying something and it causes economic damage, then logically they must bear some responsibility for it. So we are discussing with ČEZ and other competent people to quantify what the delay could cost…. We can’t just let it be.”

KHNP said that as the main contractor, it now plans to deliver the entire EPC, commissioning, and nuclear fuel supply scope of the project together with Team Korea partners: KEPCO E&C (design), Doosan Enerbility (major equipment and construction), Daewoo E&C (construction), KEPCO NF (nuclear fuel), and KEPCO KPS (commissioning and maintenance).”

KHNP and EDU II, “following a kick-off meeting, will begin full-scale project execution”. KHNP also plans to sign subcontract agreements with each Team Korea member for their respective scopes. It will also host two briefings this year for interested Czech suppliers. KHNP said it had “already begun building a construction information system to manage documents, licensing, and schedule from the negotiation phase”.

In addition, “a site office will be established at Dukovany to support swift mobilisation of expert personnel and the execution of initial work such as site surveys”, while EDU II “plans to proceed with design, licensing, and construction preparation procedures in cooperation with KHNP, aiming to start construction of Dukovany unit 5 in 2029”.

Vlček said that the initial 30% involvement of Czech companies will increase to 60% by the end of the construction. A framework agreement was signed last month “for the comprehensive supply of a turbine hall and a contract for the supply of a steam turbine between Škoda Power, KHNP and Doosan”. He added: “This part of the project, which is highly technologically demanding, can account for up to 15-20% of the total contract volume and will enable the involvement of a number of other companies within the Škoda Doosan Power subcontracting chain.”

KHNP recalled that this is the second successful export project after the Barakah project in the UAE and that South Korea “which once imported European-type nuclear reactors, has now grown into a country capable of exporting reactors to Europe”.