Analysts: KHNP deal for Czech Dukovany project could still fall through

South Korean company KHNP could withdraw from the contract to build new nuclear units at Dukovany because of new legal disputes, analysts contacted today by the Czech News Agency (ČTK) said. In that case, Czechia would have to reconsider the offer from French company EDF, they said. French European Commission (EC) Vice-President Stéphane Séjourné has now called for the signing of the construction contract to be postponed, and the Regional Court in Brno also blocked the signing of the final Dukovany agreement last week. French company EDF did not win the tender.

Experts say a delay in signing the contract could mean that it is not signed until the next government takes office. “Whether this dispute is resolved under the current or the next government, any administration will be interested in completing the Dukovany project. Even if it ultimately turns out that political and legal circumstances make KHNP’s participation in the construction impossible, the French offer still stands,” said Jiří Gavor, an ENA analyst and executive director of the Association of Independent Energy Suppliers (ANDE).

According to Gavor, the semi-state-owned energy company ČEZ did not make a mistake in selecting a company to build the Dukovany units; it chose the best offer based on the criteria set at the time. Some important circumstances were unknown when the parties were discussing who might carry out the project. For example, Gavor said, nobody expected an attempted coup to take place in the Asian country, or the current South Korean government to be less supportive of nuclear power, or KHNP to reach an agreement with US company Westinghouse and more or less withdraw from other projects in Europe.

French company EDF would still like to build the Dukovany units, according to Petr Bartoň, an analyst at Natland. He said that ČEZ chairman Daniel Beneš’s statement today that the French want to do everything they can to prevent new units from being built in Czechia does not reflect reality. Bartoň also pointed out that the French company’s original offer envisaged a larger percentage share for Czech companies than KHNP has contractually pledged. Under the agreement with the South Koreans, domestic companies will account for 30% of the project. However, KHNP has pledged a 60% share.

“The French have so many projects across Europe that they actually need a partner with experience in nuclear power plants who can help them build the others. This is also why it makes more economic sense to build a Czech plant with a partner that certified Czech industry can then work with on other plants, rather than with one that has abandoned all its other projects. As a result, even a 10% contribution from Czech industry could have greater economic value than the 30% promised by the current frontrunner,” Bartoň said.

EDF did not win the tender to build two units at Dukovany. Beneš said last week that EDF’s bid was not advantageous and that the Czech side could never have signed it.

Analysts say the delays could lead to further cost increases and greater losses. According to Jiří Tyleček, an analyst at XTB, a delay of several months could already result in losses ranging from hundreds of millions to several billion crowns. “In the short term, postponing the signing of the contract to build a new nuclear unit at Dukovany would slow the entire project, put the tight schedule at risk and make it necessary to extend the validity of the submitted bids. Each month of delay reduces the chances of completing the project on time,” he added.