Business ČEZ left with problematic Slovak nuclear joint venture after Rosatom talks die

07-03-2014 14:54 | Chris Johnstone

Talks about the possible Russian participation in a project to build new nuclear capacity alongside Czech utility ČEZ have collapsed. The tale here is not of Temelín and tough Czech retaliation against Russian intervention in Ukraine, but of Slovakia and ČEZ’s ill-fated joint venture with the Slovak government.

Jaslovské Bohunice nuclear power plant, photo: Ľubomír SmatanaJaslovské Bohunice nuclear power plant, photo: Ľubomír Smatana Talks between the Slovak government and Rosatom about the possibility of the Russian state nuclear company buying out ČEZ’s 49 percent stake in a project aimed at paving the way for one, and possibly two, nuclear reactors, at the Jaslovské Bohunice site in south-west Slovakia have ended.

The Slovak government had an effective veto over allowing Rosatom to buy out the ČEZ stake with Russian bosses saying they wanted a clear indication by the end of 2013 whether they would be allowed into the joint venture and under what conditions.

The Slovak Ministry of Economy and Slovak nuclear and Slovak nuclear company JAVYS confirmed this week that in spite of concessions late last year from the Russian side, the talks about the possible buy-out have collapsed with no sign that they will might resume. Rosatom had announced in late December it would no longer seek guarantees on future electricity prices for the Slovak capacity but they were still seeking some assurances that the massive project would make a profit.

That news might provide some short term relief to both Czech and Slovak governments. A three-way deal between Rosatom, near 70 percent state owned ČEZ, and the Slovak government would not too good on any account for the Czech or Slovak governments in the midst of the Ukraine crisis and increased anxieties about energy security.

But it puts the Slovak joint venture ball very much back in ČEZ’s court. The Czech power giant originally signed up to the Slovak deal in 2009 when electricity prices were twice as high as now and demand seemed likely to soar. The option to exit the joint venture then surfaced when ČEZ decided that tit would concentrate all its efforts on building two nuclear units at Temelín.

Those expectations of higher electricity prices and demand have clearly soured. Even so, Slovak prime minister Robert Fico is still enthusiastic for the nuclear project to push forward so that he can dilute the local domination of electricity producer Slovenské Elektrárne (SE). SE is 66 percent owned by Italy’s ENEL with Fico frequently clashing with the company over the budget and cost overruns of its completion of two nuclear reactors.

Meanwhile, construction of the two new Temelín reactors looks uncertain at best. Czech industry and trade minister Jan Mládek confirmed in an interview on Czech television Thursday that there is no desire from the government to provide the sort of guaranteed electricity prices that ČEZ is seeking to underpin the Temelín project and the changes of finding other risk reducing options are very slim. Ending the current Temelín tender with no winner and maybe reopening it in five years or so now looks like the most likely outcome.

The chances of a Czech-Slovak nuclear joint venture might also improve as a result, especially if the cash strapped Slovak government can find some of the finances needed to push the project along.

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