Czech ministry says Foreign Subsidies Regulation does not apply to KHNP contract

The Foreign Subsidies Regulation does not apply to the contract with KHNP for the construction of Dukovany (the so-called EPC contract), according to the Ministry of Industry and Trade (MPO). Czechia is also ready to provide the European Commission with all necessary cooperation. Industry and Trade Minister Lukáš Vlček (STAN) said this today in his response to a letter from French European Commissioner Stéphane Séjourné. The MPO published it on its website. In a letter dated 2 May, the French Commission Vice-President responsible for prosperity and industrial strategy requested that the signing of the contract for the construction of two new nuclear units at the Dukovany power plant be postponed.

"In his response, Industry and Trade Minister Lukáš Vlček assured French European Commissioner Séjourné that Czechia is ready to provide the Commission with all necessary cooperation. At the same time, he stated that, according to the MPO's expert opinion, the Foreign Subsidies Regulation does not apply to the EPC contract with KHNP. This is both due to the nature of the contract itself and because the tender was launched before the date on which the regulation entered into force," the MPO said.

According to the letter to Vlček, the Commission is asking Czechia to postpone the signing of the contract for the construction of two new nuclear units in Dukovany. It is examining whether Korean company KHNP received foreign subsidies that may distort the European Union's internal market. Both Vlček and Prime Minister Petr Fiala (ODS) described the letter on Monday as a courtesy letter, rather than an official Commission position. The European Commission subsequently confirmed that it is not legally binding.

Séjourné sent the letter to Vlček before the Regional Court in Brno issued an interim injunction based on a lawsuit by French company EDF, which was unsuccessful in the nuclear tender. The court injunction blocked the signing of the final agreement with Korean company KHNP for Dukovany. As part of its preliminary review, the Commission, according to the letter, requested information from both ČEZ Group and the Dukovany power plant, as well as from Korean firm KHNP. However, the parties have so far not provided sufficient information in response to these requests.

"KHNP responded to the European Commission's questions as early as 27 February and has received no response since then. As regards the Commission's request to ČEZ, or rather to EDU II, as ČEZ has already stated, it was not sent to the CEO of Dukovany II, Petr Závodský, or to any other relevant person, but to an unused general corporate email address. The request was also not accompanied or followed by any further communication. EDU II will send its response in the coming days," the MPO said in its response today.

KHNP succeeded in the nuclear tender last year, with the government preferring its bid over those of EDF and Westinghouse. The first unit at Dukovany is expected to be completed in 2036. The construction of new nuclear units in Czechia is set to be the largest domestic contract in history. At current prices, the cost of the currently preferred construction of two reactors at Dukovany amounts to 407 billion crowns.