State delays Temelín tender

The government has taken a stronger position on its involvement in the expansion of the Temelín nuclear power plant and in doing so has also delayed the process by which the state and energy company ČEZ will pick a final winner in the bid to carry out the half-trillion crown project.

ČEZ had originally planned to deliver technical tender documents to the bidders this month, but the government announced Oct. 20 that those would not be delivered until 2011, bids based on those documents will have a deadline in 2012, and the winner will finally be selected - by the state, Prime Minister Petr Nečas emphasized - in 2013.

"The tender is connected with significant security, economic and foreign-policy risks," Nečas said at an Oct. 19 press conference. "It's an extraordinarily important issue, an expensive issue. Only the government can deal with this fundamental, strategic issue."

The technical meetings and document preparation remain under the authority of ČEZ, which is 70 percent state-owned, but the final approval on all tender documents, and the choice of the winner, will be the state's, said Ambassador for Energy Security Václav Bartuška.

"I have been pushing for clear and strong government involvement in the tender ever since it was announced by ČEZ in August 2009," he told The Prague Post. "So of course I am glad that the government [issued such a clear statement]."

The project aims to complete the Temelín nuclear power plant by building two reactors in addition to the two that already exist, with the possibility of building three additional ones in Slovakia and at its Dukovany station in the Czech Republic. The tender is worth an estimated 500 billion Kč ($28.3 billion/20.3 billion euros), one of the largest energy projects in the region, and one fraught with political and energy security considerations as the Czech Republic seeks to diversify its energy sources. The winning bidder will enter into a decades-long relationship with the Czech Republic as it oversees the maintenance and running of the plant.

"The tender simply presents us with a very difficult choice between Russia, the United States and France," Bartuška said. "In the end, we will have to say 'no' to two of the major powers, which is one of the reasons why the state has to be involved in the decision, because it will shape the future of the country for decades."

Three bidders were approved in March of this year: the U.S. company Westinghouse, which has supplied fuel in the past for Temelín and oversaw an upgrade of the plant; France's Areva, a state-owned company; and a Czech-Russian consortium between Škoda JS and Atomstroyexport.

As of 2009, Temelín and Dukovany had a combined output of one-third of the electricity produced in the Czech Republic, according to the Prague Security Studies Institute (PSSI). The company's nationality, therefore, will have a profound impact on the country's energy profile and security, a PSSI study cautioned.

"Should Atomstroyexport win the tender, the Czech Republic would become heavily dependent on Russian nuclear technology and know-how [currently the Czech Republic imports all its nuclear fuel from Russia], and the longtime effort to lessen the dependence on Russian energy imports would be jeopardized," the report said.

The delay could become problematic for the overall project because demand for nuclear technology is rising as a result of a "nuclear renaissance" and major world powers that are planning on contracting for their own plants, such as India and China, said Petr Lang, PSSI's program coordinator. In an interview with The Prague Post, Lang expressed disappointment that the tender had been delayed, because the longer timeframe could allow for more complications, among them a "capability gap," as experienced engineers in the field begin to age and companies begin to work on projects in China and India.

"Building a nuclear power station is an enormous project logistically, economically and technologically," he said. "Time is running short; the Chinese and Indians are looking into nuclear energy to enlarge their base, so companies may become quite busy elsewhere."

The companies involved in the Temelín tender would not necessarily drop the Czech project in favor of other ones, he added, but it may mean longer construction timetables.

"[Temelín is] quite important for them, but it may mean it would take longer," Lang said. "I don't know how many nuclear stations will begin construction in the next five or seven years, but the companies could become a bit overstretched."

India and China both have existing nuclear power programs, and plan to have 20,000 megawatts (MW) and 40,000 MW of nuclear energy capacities, respectively, by 2020. China currently has 11 nuclear power reactors in operation, is constructing another 12, and plans for an additional 19 to be constructed, according to the World Nuclear Association. India currently has 15 plants, six under construction and more planned.

Delays are nevertheless a common, if not expected, part of the nuclear construction narrative, as many countries have again embraced the power source, but are stymied by the myriad safety considerations as well as unprecedented costs. The global recession, as well, has sent construction prices well above what was expected, and government regulatory bodies often have problems overseeing projects of such magnitude and with such new and complex technology. In Canada, a $1.4 billion refurbishment project is three years behind schedule after some parts failed to meet standards. One of Temelín's bidders, Areva, experienced costs 100 percent over budget - 2.7 billion euros - for a 1,650 MW nuclear power plant in Finland, a project that also saw its timeline extend from 2005-2009 to 2013.

Areva's Finnish problem arose from the country's regulatory bodies, ill-equipped to monitor the new technology, and a supply of 2,400 subcontractors that had to be rearranged with each new request from the client, Finland's Teollisuuden Voima Oyj (TVO). The result has Areva seeking arbitration in the matter.

The Czechs hope to avoid a similar fiasco, and by prolonging the preparation period, hope the actual construction timetable will not be affected, said Eva Nováková, spokeswoman for ČEZ.

"Our key priority is an absolutely perfect preparation of the project to avoid delays in the construction itself," she told The Prague Post. "Another priority is to keep all participants in the tender to keep the tender very competitive, which in the end allows us to achieve the most favorable results for ČEZ."

None of the three bidders for Temelín would grant interviews after Nečas announced the delay, but Areva and Westinghouse issued brief statements on their continued commitment to the project. No matter the outcome, the winner will have a tough road ahead, Bartuška admitted.

"Any of the three bidders can win; any of the three will have difficulties to build Temelín on time and on the budget," he said. "I have a great respect for all three ... and have met their bosses, as well as middle management and the engineers at the sites. I do have a fairly realistic view of their capabilities, and whoever wins, we want to be sure that they can fulfill its obligations."

Claire Compton can be reached at
ccompton@praguepost.com