Bloomberg News

CEZ May Seek Second Partner to Help Fund Slovak Nuclear Project

November 16, 2011

Nov. 16 (Bloomberg) -- CEZ AS, the Czech Republic’s largest energy producer, may seek a second partner to prop up its joint venture nuclear-power project in Slovakia by adding to 2 billion euros ($2.7 billion) of funds the utility is prepared to invest.

Slovakia in 2008 picked CEZ, based in Prague, to help build a so-called third-generation nuclear unit in Jaslovske Bohunice in the west of the nation. CEZ set up a venture to finance the project with Slovak nuclear decommissioning company Javys AS.

“If we continue the project, we might have to rethink the investor structure,” said Petr Zavodsky, nuclear construction director at CEZ. “The question is ‘to what extent can the Slovak side finance the project?’ We definitely don’t want to abandon it but we don’t want a majority either because that would be a huge risk. Inviting a third party is a possibility.”

CEZ may keep its 49 percent holding or give up part of it should a new investor take over a portion of the Slovak stake, he said in a Nov. 14 interview in his Prague office. The Czech utility may also invest about 2 billion euros when a feasibility study is completed by the middle of next year, Zavodsky said.

While deliberations over the Bohunice reactor continue, CEZ is choosing a supplier for two other units at its Temelin plant in the Czech Republic that are scheduled to be hooked up to the electricity grid no later than 2025. It also plans to build a third-generation reactor at the older Dukovany plant by 2032, Chief Executive Officer Daniel Benes said last week.

‘Not Gamblers’

The Bohunice reactor would be built either before or after Dukovany to spread the cost over a decade, Zavodsky said. CEZ will guard its credit rating to prevent gains in borrowing costs or a loss of profitability in future nuclear projects, he said.

“There’s no way CEZ will build Temelin, Dukovany and Bohunice at the same time,” the executive said. “We are courageous, but we’re not gamblers.”

Slovakia will decide whether to proceed with Bohunice next year, said Robert Merva, a spokesman for the Economy Ministry, declining to comment on the possible entry of a new investor.

“This isn’t an urgent issue right now,” he said.

Slovakia is finishing work on two 440-megawatt units at the Mochovce atomic plant and aims to link them to the grid by 2014. Enel SpA-controlled Slovenske Elektrarne AS is the operator.

CEZ is scheduled to pick the supplier for the Temelin project by 2013 among competing bids from Westinghouse Electric Co., Areva SA and a Russian-Czech group led by Rosatom subsidiary ZAO Atomstroyexport. The contract will also include an option to build the new Dukovany reactor.

CEZ may seek a way to legally use the same supplier in Bohunice without a public offer, Zavodsky said. Picking the supplier directly would save money and time, he said.

“To have the same supplier makes a lot of sense from the point of view of spare parts, personnel training and operating the plant. We could bring it up with our lawyers’ blessing.”

--With assistance from Radoslav Tomek in Bratislava. Editors: Tony Barrett, Reed Landberg

To contact the reporter on this story: Ladka Bauerova at lbauerova@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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