UPDATE 1-Czech president wants new tender for nuclear project

Wed Apr 9, 2014 11:43am EDT

Related Topics

* Wants Areva, S. Korean firm to bid in new tender

* Current tender involves Westinghouse, Russian-led group

* Undermined by low power prices, no price guarantees

* President does not rule out guarantees under new tender (Adds prime minister on rejecting state guarantees, para 5)

By Jan Lopatka

PRAGUE, April 9 (Reuters) - A tender for the $10-15 billion expansion of the Czech Republic's Temelin nuclear power plant should be wound down and replaced with a new contest with more bidders, President Milos Zeman said on Wednesday.

The plan to build two reactors at the site has been undermined by falling power prices and the government's unwillingness to provide price guarantees to Temelin's owner, CEZ, which is majority-owned by the state.

Zeman said he would like to see France's Areva and an entrant from South Korea take part in a new competition. The president and former prime minister does not hold much executive power but often weighs in on major economic and political issues.

The sole bidders in the current competition to build the two 1,200 MW reactors are Toshiba unit Westinghouse and a consortium including Russia's Atomstroyexport.

Zeman also suggested that if a second, bigger tender went ahead, the government could reconsider providing a guarantee for the new plant to ensure it can sell power above generating costs.

Most Czech political parties back nuclear power in general, but the centre-left cabinet on Wednesday officially rejected providing any guarantees for Temelin due to their potential impact on taxpayers, Prime Minister Bohuslav Sobotka said, dealing another blow to the ongoing tender.

Areva was excluded from the contest due to a failure to meet CEZ's conditions, a decision it is disputing. The French firm did not immediately return a call seeking a comment on Zeman's remarks.

COST FAR ABOVE CURRENT POWER PRICES

CEZ's interest in the project has been cooling due to rising costs and falling energy prices, which it says make the plan no longer viable without government support.

Zeman said a new tender with four rather than two entrants offered "a chance to lower the price".

He did not name the South Korean firm, but it was the first time a company from South Korea has been mentioned in connection with Temelin. A representative of Korea Electric Power Corp (KEPCO) was part of a South Korean delegation to the Czech capital this week.

Zeman said once bids were in, the government could look again at the possibility of providing some aid via a contract for difference, a system under which a fixed price would be set for power generated at the new plant.

If market prices were lower, the government would cover the difference. If prices rose above that level, the plant's operator would pay the spread to the government.

European wholesale electricity prices have more than halved since the start of the euro zone crisis. The benchmark one-year forward rate fell from nearly 90 euros per megawatt in July 2008 to around 34 euros. That is a fraction of the level CEZ sees as breakeven.

CEZ Chief Executive Daniel Benes told Czech Television on Monday the utility would stop the current tender if the government did not agree to price guarantees by June.

He told a parliamentary committee on Wednesday there was no way for CEZ to push ahead without state aid.

Industry and trade Minister Jan Mladek has said that one option is for a fully state-owned entity to take over the Temelin project. (Additional reporting by Jason Hovet and Robert Muller; Editing by John Stonestreet and Jane Baird)

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