PRAGUE--Czech power company CEZ AS is canceling the $10 billion
tender for two new nuclear reactors at its Temelin power plant,
citing the unfavorable economics of the project, a lack of
financial guarantees from the government, and uncertainty over the
European Union's future energy and climate policy.
CEZ, which is 70% state-owned, said Thursday it discussed the
cancellation with the Czech government and has since informed the
three companies that made it into the final round of bidding:
France's Areva SA, Russia's Rosatom and Pennsylvania-based
Westinghouse Electric Co, a unit of Japan's Toshiba Corp.
CEZ and the Czech government said they would comment later in
the day, while Areva--which in 2012 was excluded from the bidding
due to commercial and legal flaws in its offer, according to
CEZ--had no comment.
Westinghouse and Rosatom weren't immediately available to
comment.
CEZ said, however, it remains committed to zero-emission nuclear
energy and that by the end of this year it would announce a new
strategy for the expansion and modernization of its nuclear power
facilities.
The company has two nuclear power plants: Temelin has two
reactors and a total installed capacity of 2,100 megawatts, which
would have been doubled had the tender gone forward; and the
Dukovany plant, which has four reactors and a total installed
capacity of 2,040 MW.
The effort to expand Temelin began in earnest in 2009 when CEZ
started official work on the tender. Since then, however, the
project has become economically unviable due to wholesale
electricity prices tumbling to historic lows as a result of
Europe's economic crises and slowdown, and a surge in new, heavily
subsidized electricity-generation capacity from renewable energy
sources, such as photovoltaic and wind power.
The process was cast into further doubt when Russia annexed
Crimea from Ukraine this year, prompting some Czech ministers to
say Rosatom should be eliminated from the bidding.
The cancellation of the tender frees up future dividends for CEZ
shareholders, cash payouts that would have been used for capital
expenditure if the new reactors were built. The decision also
prevents the company from having to take on significant amounts of
additional debt to finance the project.
Consequently, CEZ shares soared Thursday and were outperforming
the overall market in Prague.
Write to Sean Carney at sean.carney@wsj.com
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