UPDATE 2-CEZ dumps Areva from Temelin nuclear tender

Fri Oct 5, 2012 10:58am EDT

Related Topics

* CEZ says Areva fails to meet requirements

* Disqualification leaves U.S., Russian firms in tender (Adds quotes, shares, details)

By Jason Hovet and Jan Korselt

PRAGUE, Oct 5 (Reuters) - Czech power group CEZ threw out Areva's bid for a multibillion-dollar contract to expand the Temelin nuclear power plant, leaving U.S. and Russian firms to contest the country's biggest-ever energy deal.

CEZ, central Europe's largest company with a market value of $20 billion, said Areva failed to meet "crucial requirements" in the tender to double the size of the 2,000 megawatt plant with two new units.

Media have said the deal would be worth $10 billion or more, although majority state-owned CEZ has never put a price on it.

Areva's disqualification now leaves Toshiba's U.S. unit Westinghouse and Russia's Atomstroyexport as the only bidders, pending an appeal by the French company.

The Czech nuclear energy push has ran into opposition in neighbours Austria and Germany, but is the cornerstone of a government drive to secure its energy future.

Russia is already a major oil, gas and nuclear fuel supplier for the ex-Soviet nation of 10.5 million, giving CEZ a stark choice between east and west in the tender. A winner should be picked by the end of next year.

"CEZ has today informed Areva that their bid failed to meet statutory requirements for building two new units of the Temelin nuclear power plant," CEZ said in a statement.

CEZ said that the criteria were both commercial and legislative, but it would not give details until after the appeal process has finished. Spokesman Ladislav Kriz said later that the disqualification was for "fundamental shortcomings".

Areva plans to appeal the decision. "Areva firmly believes we have met all the tender criteria," a spokeswoman said.

Areva shares rose 2.4 percent on the day, outperforming the Paris bourse, while CEZ shares were up 0.8 percent.

This is the latest blow for Areva, the world's largest reactor builder, which had bet on the Czech Republic to revive its international nuclear reactor business.

Areva this week dropped out of the race to buy British nuclear new-build project Horizon.

NUCLEAR PUSH

The Czech Republic has been a member of the European Union since 2004. A few years ago it tentatively agreed to house part of a U.S. missile defence system, a move that irked Russia.

Fears over Russia's influence are strong in the central European nation.

But some in the industry say the tender choice is different to oil and gas in that a nuclear power supplier can be changed more easily.

Temelin, the biggest energy source in a country where nuclear power meets a third of annual electricity needs, consists of two Russian-type units that were refurbished with Westinghouse technology before first going into operation in 2000 and 2003.

The units are run with Russian fuel after switching from U.S. fuel. (Additional Reporting by Michael Kahn, Jana Mlcochova and Michel Rose in Paris; Writing by Michael Kahn and Jason Hovet; Editing by David Goodman and David Cowell)

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