June 20, 2018 / 2:16 PM / 9 months ago

CEZ chief says state-owned CEZ part best placed to build nuclear plants

PRAGUE, June 20 (Reuters) - A state-owned part of Czech utility CEZ would be best placed to build up to three nuclear power plants because a state company requires lower capital returns than a private one, Chief Executive Daniel Benes said on Wednesday.

The government, CEZ’s 70 percent owner, has been considering options to build new nuclear plants, including some public support or revamping the power company.

CEZ has supported new nuclear units but has declined to build them commercially to prevent losses from high construction costs being borne by private shareholders.

“It comes out best (from CEZ and government analyses) if the project is done by a part of CEZ that will be, at that point, 100 percent state-owned,” Benes said during a visit by President Milos Zeman to CEZ’s Ledvice power plant.

He said Hungary, which has agreed with Russia to build a new nuclear power plant at Paks, showed the government could invest with lower required capital returns than a private firm.

“When Hungary counts only the cost of money, then in its estimates power from the Paks 2 plant will cost somewhere between 40 and 60 euros per megawatt hour,” Benes said.

“When you have a commercial entity with a commercial calculation taking into account borrowed money as well as shareholders’ money, then they get to weighted average capital cost of around 10 percent and the electricity will be twice more expensive.”

Prime Minister Andrej Babis has been cool to any CEZ transformation and has said CEZ should finance the nuclear construction itself. CEZ holds an annual meeting on Friday but no decision is expected there.

Benes said in a newspaper interview on Monday the latest idea of a possible revamp could include putting renewable assets, energy services and distribution into a subsidiary that would have private shareholders.

The government would buy out private shareholders in the parent firm which would keep the nuclear and coal assets.

A new nuclear plant would be the NATO and EU country’s biggest-ever investment project.

Potential bidders who have shown interest in the past are Russia’s Rosatom, Westinghouse Electric, France’s EDF, EDF-Mitsubishi Heavy Industries joint venture Atmea, China General Nuclear Power and South Korea’s KHNP.

Zeman has had good relations with Russia and China and his main economic adviser has consulted with Rosatom on nuclear cooperation.

The government wants to build one new unit at CEZ’s Dukovany plant to replace units there due to be retired around 2035.

Benes said it would be favourable to tender for a supplier for three units, with the other two to be built by 2050.

Reporting by Jan Lopatka, editing by David Evans

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