Future of Czech engineering jewel, VPE, unclear

Photo: Vítkovice Machinery Group

Certain parts of the Czech engineering sector are not experiencing the feel good effect blowing across most of the Czech economic landscape.

Photo: Vítkovice Machinery Group
One of the biggest engineering groups in the country, Ostrava-based Vítkovice Machinery Group has clearly been going through some problems of late. The biggest engineering group in the country has put up for sale some of its real estate assets, is looking for a buyer for Vítkovice Gearworks, and one of its key divisions, Vítkovice Power Engineering (VPE), which now employs 600 after cutting the total from 800, was undergoing a reorganisation process aimed at putting it back on its feet.

That reorganisation at VPE might or might not be going ahead. The question mark was raised this week when the company’s bosses asked a court to bring to an end the restructuring process and start bankruptcy.

The bosses argued that a sale of key assets was going nowhere and that in any case they would not really address the company’s problems. And a deal for the core company activities had collapsed after the two interested parties changed their stance during talks, the note to the court commented.

Added to that, the letter said that parent company, Vítkovice Machinery Group, was not willing to inject the sums needed for continued survival. In this context, the reorganisation costing several tens of millions of crowns a month, should be ended as soon as possible, the letter stated.

Vítkovice Machinery Group fired back that the move by VPE bosses was unilateral and taken without consultations with the mother company. The move threatened to torpedo talks aimed at finding an investor for the troubled Adularya Turkish power plant, which is the source of much of VPE’s problems, and for VPE itself, the mother company said. It added that it is willing to inject case to see the reorganisation and completion of key projects through.

Where that leaves VPE now is not clear. The original reorganisation was cleared at the end of 2016. The latest deadline for it was August 14 with the expectations that an extension would be sought.

But what is at stake with VPE? It has been one of the biggest energy and in particular nuclear power contractors in the Czech Republic. Specialising in Soviet designed VVER reactors, it carried out a lot of work on the cores of the current Temelín and Dukovany reactors. It has carried out work on the ongoing completion of the Mochovce 3 and 4 reactors in neighbouring Slovakia and it has had contracts for work on three Russian reactors over the past five years. Presumably, VPE would also have been lined up to carry out work on the next generation of Czech nuclear power plants as well if and when a decision for their construction comes through.