Construction of new blocks at Temelín nuclear power plant might face delays

The Czech state-controlled energy producer ČEZ is considering postponing the construction of two additional blocks at its Temelín nuclear facility, the daily Hospodářské noviny reported on Wednesday. The paper says that the company’s increasing debt and uncertainty over the future of the electricity market might delay a deal worth of hundreds of billions of crowns for several years.

The biggest tender ever held in the Czech Republic is going ahead as planned, though its winner might have to wait for longer than expected to get the job done.

The construction of two new blocks at the Temelín nuclear power plant, which is supposed to start in 2020, might be postponed by several years due to problems faced by the state-controlled energy producer which runs the plant.

The daily Hospodářské noviny quoted a source from within ČEZ who said the alarming growth of the company’s debt (which has tripled over the last six years), together with a drop of electricity prices, may lead to the energy giant delaying the construction of two new blocks at the Temelín nuclear power plant in south Bohemia. Hospodářské noviny’s Jaroslav Plesl explains.

“It is obvious that ČEZ managers are becoming nervous about the amount of the company’s debt. They are concerned that if they go ahead with their investment programme as it was laid out several years ago, they will reach a level of indebtedness that will basically damage the image of the company in the eyes of the investors and analysts.”

Temelín nuclear power plant
The tender for the two new Temelín blocks, is estimated at around 500 billion crowns, or 28.5 billion US dollars. Three bidders are competing for the job: Russia’s Atomstroyexport, Areva from France, and the US firm Westinghouse. The winner should be announced in 2012.

ČEZ has not officially confirmed the reported delay but says that the tender itself might take longer than expected. A spokeswoman for the firm, Eva Nováková, says bidders for the deal themselves have asked for more time.

“The fact is that we are now negotiating with the participants in the tender and we are analyzing the market. During these discussions, some of the participants indicated their concern with the schedule of the tender. But that’s the only thing I can confirm right now. You will know more about the matter in a month.”

Last year, ČEZ cut its investment plan for the next five years from 425 to 333 billion crowns. But the company denies that cuts would also involve the two new blocks at Temelín.

The Czech government’s commissioner for the completion of the power plant, Václav Bartuška, says nothing has changed in the country’s energy strategy – raising the share of nuclear power from the current one third to about a half. But the Temelín project must be profitable.

“There is definitely a threshold for the project to make commercial sense. That’s normal and it’s like that with any other projects. You don’t say in the beginning that you definitely want to build something. You want to the price quotations and you want to know how much it will cost you. That’s normal.”

ČEZ is also considering bringing in co-investors in order to spread the risk. But if the electricity market continues to suffer, the future of the two new blocks at Temelín will be uncertain.