Czech Republic excludes China from Dukovany tender

1 February 2021

There was general agreement that Chinese companies should not take part in the tender to build a new nuclear unit at the Dukovany NPP following a meeting on 27 January between the Czech government and leaders of the opposition political parties, Industry and Trade Minister Karel Havlícek told reporters.

The new unit at Dukovany is to replace the older reactors that are approaching the end of their operating life and coal-fired power plants that are to be shut down to meet EU climate goals.

However, Havlícek added that there was no consensus on whether to also exclude Russia from the bidding. Reuters reported that the EU and NATO member country’s security services had recommended excluding both Russia and China on national security grounds.

Five companies have expressed interested in building new nuclear unit, estimated to cost more than $7billion  - China General Nuclear, EDF, Korea Hydro & Nuclear Power, Rosatom and Westinghouse. The joint French-Japanese company Mitsubishi Atmea also originally expressed interest, but has withdrawn.

The Czech Senate Committee on Foreign Affairs, Defence and Security in December had called on the government not to allow the participation of Russia and China, even as part of a consortium. This came after an announcement earlier in December by the Ministry of Industry and Trade postponing the tender from the end of 2020 until 2021.

Four possible options for the tender were being considered: to invite all five of the interested bidders; to exclude China and Russia; to postpone a decision until after the forthcoming general elections in October; to allow Russia and China to take part within a consortium including countries from the EU and NATO.

In July 2020, the government had signed a framework agreement with power company CEZ and the project company Elektrarna Dukovany II under which CEZ was to hold the tender, sign a contract and obtain the necessary licences by 2024 so that the unit could begin operation in 2036. The government also agreed to provide guarantees for any political or legal risks, and to provide up to 70% of the funding, with 30% to be provided by CEZ.

"Basically, we are all inclined to believe that China is unthinkable as a potential supplier for us in the tender,” said Havlícek. “At the same time, the political parties are divided in that a certain politicians would like to exclude Russia as well, while others want it to remain.”

First Deputy Prime Minister Jan Hamácek told a press conference he would personally welcome Chinese or Russian companies to participate in the tender, but only as part of larger consortia, where non-Russian and Chinese companies would play a leading role.

"If it turns out that there is no support for this and the only way to move forward is to limit the tender to countries that are not considered risky, I will have no problem supporting that as well. But, in this case I am afraid that this will reduce pressure on the final price and the supplier's ability to implement the tender in general.”

Havlícek said the government is now considering financing the new block on its own without involving CEZ as this could lower electricity prices and the interest on any loan for construction. However, in such a situation, the project would require the approval for state aid from the European Commission.

The meeting also discussed how much time the interested parties should have after the start of the tender to submit a bid. Havlícek said it could be up to a year, although CEZ has been advocating seven months. A decision on this will be made in the coming weeks. A key factor here is the October general election as the leaders of all five opposition parties have said that, if Russia is invited to tender, they will reverse that decision if they win the election.

Pressure to move quickly with the tender is also coming from business and trade union leaders. The day before the government meeting with the opposition parties, unions and businessmen called an extraordinary tripartite meeting with the government in which they appealed appeal to Prime Minister Andrej Babiš not to postpone the announcement of the tender and to decide on it before the autumn elections. They also urged that all five companies should be allowed to bit to ensure a competitive price.  "There is no reason to postpone such a fundamental matter," said Jaroslav Hanák, president of the Confederation of Industry and Transport of the Czech Republic. 

One concern is that postponing the tender until after the elections would result in at least two years’ delay before a new government is formed and incorporated. This would mean a delay in construction and subsequent supply of electricity.

As to China, the Chinese Embassy issued a statement on 28 January protesting against the decision to exclude CGN and urging the Czech government to "conscientiously abide by the principles of market economy and fair competition”. An embassy spokesman said the decion “violates international economic and trade rules, violates the normal market order and damages the legitimate rights and interests of the Chinese company”.

Currently, the Czech Republic has four nuclear units at Dukovany, each with a capacity of 510MWe and two at the Temelín each with capacity of 1055MWe. Dukovany, which started operation in 1985, accounts for a fifth of the electricity consumption in the country. The units have a 30-year design lifetime, but CEZ plans to keep them operating for 60 years. 

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