Czech government takes note of Dukany reactor financing model

The financing model for the construction of two new nuclear units at Dukovany is ready. The government discussed it at its meeting on Wednesday and took note of it. The Ministry of Finance (MF) reported this today. The ministry did not disclose details of the financing, citing ongoing negotiations on the contract with South Korean company KHNP. The model will still need approval from the European Commission.

South Korean company KHNP is to build the two new nuclear units at Dukovany, with the semi-state-owned energy company ČEZ as the investor. The companies are now negotiating the final contract, which they aim to sign by the end of March next year. According to the South Korean company, the political developments in South Korea have not yet affected the ongoing negotiations. President Yoon Suk Yeol faces possible removal from office over his recent declaration of martial law in the country. Yoon Suk Yeol had openly supported KHNP’s bid in the Czech tender.

The material was prepared by a working group comprising representatives of the Ministry of Finance, the Ministry of Industry and Trade (MPO), and the ČEZ Group. The MF submitted it to the cabinet under a classified procedure because, according to the ministry, it contains sensitive, market-moving information. „The government took note of it yesterday and approved the resulting steps,“ the Ministry of Finance said. It plans to publish details of the model only after the contract with the supplier is signed.

Czechia will still need to seek the European Commission’s approval for the financing model. In the spring, the Commission approved the model for the first planned unit. To support construction, the state envisages three main instruments: a state loan in the form of repayable financial assistance; a commitment by the state to purchase electricity from the new unit for 40 years at a predetermined price; and protection for the investor against external risks, such as changes in legislation or policy. According to the ministry, the level of support will be based on the final price.

At current prices, the cost of the currently preferred option of building two reactors is 400 billion crowns. The first of the new reactors at Dukovany is expected to be completed in 2036. Over the next three to five years, energy company ČEZ is also expected, under a government decision, to negotiate with the Koreans an option to build two more units at Temelín.

When selecting the construction supplier, the government preferred South Korean company KHNP’s bid over that of France’s EDF. The other bidder, US company Westinghouse, had already been excluded from the tender. Both companies challenged the tender result with the Office for the Protection of Competition (ÚOHS). The office rejected their complaints at first instance, but both companies appealed. A preliminary injunction therefore remains in force, prohibiting ČEZ from signing a contract with KHNP; it will cease to apply only once a final decision has been made.