Czech Republic - CEZ Receives Three Bids for Temelin Nuclear Power Project

CEZ AS (CEZ), the Czech Republic’s largest producer of electricity, received three bids for its project to build two new reactors at the Temelin nuclear power station. 

Westinghouse Electric Corp., Areva SA (AREVA) and a Russian-Czech consortium led by Rosatom Corp.’s Atomstroyexport unit, the three bidders selected by CEZ in 2010, submitted their final offers today, the Prague-based utility said in an e-mailed statement.

The new third-generation reactors are intended to replace CEZ’s aged coal-fired plants, reduce carbon dioxide emissions and solidify the Czech Republic’s position as a regional power exporter. CEZ will choose the winner of the tender, whose value is estimated by analysts at $10 billion, before the end of 2013 and the construction should start no later than 2016, it said.

“The construction of new Temelin reactors is a key pillar of CEZ’s strategy,” Chief Executive Officer Daniel Benes said in the statement. “Today marks a significant step towards ensuring steady electricity supply for Czech customers for decades to come.”
 
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By Robert Muller

May 17 (Reuters) - CEZ is committed to building a fifth nuclear reactor at Dukovany despite cost pressures that have clouded the Czech utility's expansion plans, Chief Executive Daniel Benes said on Thursday.
The company also plans to build two units at its other nuclear site at Temelin followed by as many as three more elsewhere in the Czech Republic and Slovakia.
Hurdles include an uncertain energy market in Europe and opposition to nuclear expansion from neighbouring Germany and Austria.
"We are working on the feasibility study. We have a schedule and we have the intention of getting this project done," Benes told lawmakers in a lower house committee.
"We assume ...the unit might be completed between 2032 and 2035."
He reiterated the Temelin expansion completion date remained at 2025.
CEZ and government officials say building more nuclear reactors including the one at Dukovany is needed to deliver stable electricity prices and safeguard the European Union nation's future energy security.
Last week, CEZ, central Europe's largest listed company, said it would launch a tender to select a potential strategic partner for the multi-billion dollar Temelin expansion project.
Benes said while a strategic partnership was an option, CEZ could potentially build the project on its own if needed.
"When the tender is finished, we would decide with our shareholders whether it makes sense to have a strategic minority partner. It may be that we will pick no one," he said.
Analysts have said CEZ could fund the project without a strategic partner or state guarantees on loans, but that it would take on too much risk without power purchase price guarantees, an option of support which government ministers have been open to.

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CEZ considers partnership for completion of nuclear power station

CEZ Energy intends to consider the possibility of a strategic partnership in the completion of the Temelín Nuclear Power Station. It is usual in Europe that nuclear power projects are built and subsequently operated by consortiums of several companies; the French EDF, several times larger than CEZ, is also implementing the Flamanville project in a consortium with Enel. CEZ has received bids from several interested parties and, since a partnership sounds logical, CEZ has decided to select the potential partner in a transparent tender. Given the fact that the selection of a supplier for the completion of Temelín is carried out pursuant to the Public Contract Act and that the information in this public contract is highly confidential, the partnership will probably be formed after the contract with the selected supplier is signed, which is expected to happen in 2013.
CEZ is prepared to fund the project using its own resources and available debt capacities; however, there are many other interesting investment opportunities, which the CEZ Group might reach if a strategic partner joins the consortium. The potential split of the risk of the completion and return of the project into several subjects is also motivating. Most of Europe's nuclear projects (France, Finland, Great Britain) are implemented on the basis of various forms of partnerships for this very reason. "CEZ may also profit from the strategic partnership by acquiring new know-how connected with the building of nuclear power stations," says Daniel Beneš, Chairman of the Board of Directors and CEO of CEZ.
The initial market analyses show that it is possible to invite more than ten energy companies, most of which are based in Europe, which either have already shown interest or may become interested in negotiations about such partnership. The partner will be selected in a transparent selection procedure, whose requirements will be defined in advance.
The preparation of the completion of the Temelín Nuclear Power Station is progressing as scheduled. At present, the tender for the supplier of the completion of Temelín pursuant to the Public Contract Act is well underway. The output from this procedure for the selection of the supplier will be one of the basic criteria influencing the decisions on the form of the potential strategic partnership. Therefore, the process of the selection of a strategic partner will not finish until the winner of the Temelín public contract tender is known.

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Czech power utility CEZ looks for partner to finance building 2 more nuclear reactors

PRAGUE — A state-run utility in the Czech Republic says it is considering joining forces with a strategic partner in a multibillion-dollar project to build two more nuclear reactors at a power station.
CEZ says more than 10 energy companies, mostly from Europe, seem to be among potential partners to help finance and operate the project at the Temelin nuclear power station.
U.S.-based Westinghouse Electric Co., a subsidiary of Japan’s Toshiba Corp., France’s state-owned nuclear engineering company Areva SA and a consortium led by Russia’s Atomstroyexport are bidding for the lucrative deal with an estimated value of more than $10 billion.
CEZ said in a statement Wednesday a new partner that would be chosen in a tender could join after a deal with the winner is signed in 2013.

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CEZ May Seek Partner for $10 Billion Temelin Reactor Project

Bloomberg
January 26, 2012, 10:32 AM EST

By Ladka Bauerova

(Updates with today’s share price in fifth paragraph.)

Jan. 26 (Bloomberg) -- CEZ AS, the largest power producer in central and eastern Europe, will consider bringing in an investment partner to help finance a $10 billion project to build two reactors at the Temelin nuclear power station.

“It’s one of the options we are actually assessing,” Martin Novak, the chief financial officer of CEZ, said yesterday in an interview in his Prague office. “We are definitely looking at models of how nuclear plants are built today in Europe. We are looking at forms of sharing the risk.”

The Prague-based utility is in the process of choosing a supplier to build two reactors in Temelin from Westinghouse Electric Corp., France’s Areva SA, and a Russian-Czech consortium led by Rosatom Corp.’s unit Atomstroyexport. The winner of the tender will be picked by the end of next year and construction should start no later than 2016, Novak said.

The reactors are intended to replace CEZ’s aged coal-fired plants, reduce carbon dioxide emissions and solidify the Czech Republic’s position as a regional power exporter. CEZ increased sales to Germany last year after Chancellor Angela Merkel ordered the shutdown of some of the country’s oldest reactors following the Fukushima disaster in Japan.

The shares rose as much as 1.9 percent and were up 1.2 percent to 760 koruna at 1:58 p.m. in Prague, rebounding from a three-day slump.

While CEZ is capable of financing the construction of Temelin units 3 and 4 on its own through a combination of cash flow and debt, inviting another investor remains an option because it would leave the Czech utility a freer hand to invest in other projects, according to the executive.

Set Aside Cash

“Companies might prefer diversification of their portfolios, so they better do such projects with somebody,” Novak said. “They set aside cash for good acquisition opportunities such as when distressed companies are selling assets.”

Cash flow remains the main source for financing the Temelin project, he said. CEZ, whose current debt-to-earnings ratio is about 1.8, plans to raise cash on the bond market and bring the debt level up to 2.3 later in the decade to fund the construction, he said.

The debt level will initially drop between now and 2016 as the company’s spending on conventional power plants at Tusimice, Ledvice and Pocerady eases off and the plants begin to generate cash, Novak said.

“We are already the least indebted power utility in Europe, and after we go through our capex program by 2016 we’ll have a much lower debt,” Novak said. “If you want to enter such a lengthy project that doesn’t generate any cash flow until it’s fully commissioned, you need to be in perfect shape before you start.”

Retain Rating

The company’s aim is to retain its A debt rating and pay out dividends while building the Temelin reactors. CEZ is also examining forms of potential government support such as feed-in tariffs for nuclear energy that would reduce investment risk and create conditions for stable income from the new reactors, he said.

“We are looking at models that are being used in Europe and the U.S. for such projects,” Novak said. “There are many options. We are just at the beginning, there is no one single way to go.”

CEZ is also carrying out a feasibility study to build another reactor at its Dukovany nuclear plant, though not before completing Temelin, the director said. The company has also commissioned a feasibility study for additional reactors at the Slovak nuclear plant Jaslovske Bohunice through a joint venture with Slovak state nuclear company Javys.

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