If Czechs wish so, we will pay the reactors
Mladá fronta Dnes; Jan Brož
Help to fund new nuclear reactors is offered by Russia to the Czech Republic. However, Russia prefers the selection of the supplier would not happen through public competition.
Kirill Komarov, First Deputy Director of Russian nuclear reactors supplier Rosatom, knows the Czech Republic well. Three years ago he represented the Russian side in the tender for new nuclear units in Temelin but before the winner was chosen, the tender was cancelled by ČEZ. This experience probably led Mr. Komarov to believe that the selection of the supplier through public competition was not effective. “I am not saying that a tender is not an option but it is not an effective solution,” says man who would probably be seen in the Czech Republic more often, as the debates about construction of new nuclear units in Dukovany continue. Last week he took part in one of his first Prague meetings with the Czech government’s representatives.
How did the negotiation proceed? What were the results?
I can not say it was a negotiation, even preliminary negotiation. I would rather say that it is a dynamic process. Last year we received a request for information form the Czech government – in principle it was a question whether we were interested in construction of a new nuclear units and, if so, what our conditions were. In October, we sent a reply and now we expect additional and more specific questions from the Czech government. Then we will prepare our responses but it may still take some time.
However, because of you presence in Prague it can be concluded that Rosatom certainly is interested in construction of Czech nuclear power plants.
In the long term Rosatom cooperates with the Czech Republic. All operating nuclear units in the Czech Republic were built according to a Russian design and we supply them with nuclear fuel. In recent years, we started to provide service for nuclear power plants. We own company Arako in Opava which manufactures valves. Above all, on the so called list of Czech suppliers are 37 Czech companies – 12 of them are currently involved in the project concerning Belarussian nuclear power plant.
You have participated in a tender for new units in Temelin, which has cost you a lot of money, but the tender was later cancelled by ČEZ. In addition, the Czech Republic is not able to agree on the financing model. It is also unclear if the government would provide guarantees for the construction that would not be financially viable under current electricity prices. Why, after such experience, Rosatom still wants to build new nuclear units in the Czech Republic?
From the Czech party we see honest and serious interest to build new units. The government approved two key documents: update of the State Energy Policy and the National Action Plan for the development of nuclear energy. It has sent a request for information to several companies, set up the Standing Committee for Nuclear Energy and appointed government commissioner for nuclear energy. All this suggests that the Czech government is serious player. However, it is true that the key issue, the financing issue, must be solved beforehand. And, naturally, state guarantees is not the only possible way.
What do you mean?
Currently, we are building more than 34 units around the world and other plants in Russia. Our portfolio of contracts abroad for the next 10 years exceeds $ 133 billion. Thus, we have experience with construction abroad and with different financing models. We are going to share this experience willingly with the Czech government. Rosatom does not want to simply come, grab money and build the power plant. We will actively participate in the process. We can explore various funding options with the Czech government, be a minority owner or come up with a funding proposal of our own.
Are you ready to offer in the Czech Republic the model that works in Hungarian power plant Paks? There, Russia provided credit for its construction and in exchange it became the general supplier of nuclear technology.
From our side, we are willing to engage in any model, including the Hungarian one where we have offered the intergovernmental financing. Perhaps we could offer the model that is used in Turkey. There, we built and now own the nuclear power plant and we will sell electricity. The Turkish government guarantees us that it will buy electricity at agreed prices. The difference between both alternatives is obvious: in Turkey the power plant belongs to us, in Hungary - to the state.
However, the Czech government has never considered the Turkish model.
I do not know about it. In the current phase, in my opinion, any possibility has right to exist. It is important that it has to be economically favourable for the Czech government. It is possible to select a combined option, for example, where we would partially finance the construction and become partial investor.
And what about the model that is applied in Finland where the power plant is financed by a consortium of investors?
In my opinion, it is not transferable to the Czech Republic. This model is usual in Finland. Investors do not receive dividends but, according to their proportional participation, get electricity. For most of these companies the electricity prices are crucial and it plays a significant role in the price of end products - for example smelters. They need stable and predictable price of electricity, so they invest in the construction of nuclear power plant. In the Czech Republic similar model was never implemented. It requires very special relationship within the consortium and it is not easily transferable.
If the Czech government provide no guarantees that is rejected by the Ministry of Finance Andrej Babiš, and conditions of coming tender do not be different from former Temelin tender, will you still be interested in this contract?
If a tender starts, participants should be confident that the winner would sign a contract and the order will be placed. When the previous tender started, no one mentioned the possibility that ČEZ would not be able to pay for the power plant. Later on the situation on energy market changed. If a tender is announced today, there would be no participants unless it is made clear who will finance the nuclear power plant. Generally, I am convinced that a public tender is not the right way of constructing a nuclear power plant.
I do not say this because we do not want to compare our strength with competitors. On the contrary, the competition is necessary. The format of the public tender is very unsuitable for construction of nuclear power plants. Through the tender it is possible to buy, for example, a glass of water. It is easy to define the requirements: the bottle has to be made of glass, the water has to be pure and so on. However, in case of the power plant you have to respond to too many questions at the same time and eventually we will get into a “grey zone”, where the criteria for selcting a winner would not be clear at all. For example, there are 50 thousand types of equipment or components in a single nuclear power plant – I emphasize types, not pieces. Imagine that amount! In addition, these parts are completely different for each supplier – we have one type, Americans have another, French and Koreans have yet another type. How do you propose to compare them to each other?
So you will try to convince the Czech government not to announce yet another tender?
We are the largest builder of nuclear power plants in the world and, as I mentioned, at this stage our main goal is to share our experience and knowledge with the Czech government. We want to hand over maximum information for the decision making. After all, the government must make a decision for itself. I’m not saying that a tender is not possible but it is not the most effective solution. If it happens, we will take part. However, it is the least suitable way to select the supplier. No tender for nuclear power plant construction has been announced lately. No public competition took place in Flamanville project in France, which is under construction and nor did it happen in Hinkley Point C project in Great Britain, which is scheduled for construction soon.
It seems that there will be significantly more candidates for the construction of new units in the Czech Republic than three years ago in Temelin tender. How do you evaluate the competitors?
It is too soon to talk about it. We do not know the criteria that will be used for selecting the supplier. However if the technical aspects play the major role, we can say that Rosatom is the only company that has an actual generation 3+ reactor. It wasn’t built by the Americans, not even by French, Chinese or Koreans. Also in the point of location, i.e. the involvement of Czech companies, Rosatom has opportunities like nobody else. However, in the cancelled Temelin tender the location was not a criterion at all. So it can not be now determined what the strengths and weaknesses are of each competitor.
From the outside view, it looks like the extraordinary interest in the order has Chinese company CGN, which is a lot talked about. Do you agree?
It is true that China is now very actively trying to sell its reactors worldwide. But it is also important to add that besides Pakistan they have yet to sell any reactor abroad. Rosatom has done this many times and we have experience from countries such as Iran, China and India. And believe me, one this is to build a nuclear power plant in the country of your origin and it is completely different to build it abroad, where different rules apply and different nuclear regulatory authority acts. China has never seen this through.
You have mentioned that the only company with the actual generation 3+ reactor is Rosatom but you said that it is totally different situation to build it abroad. So how these experience are transferable and what conditions you will have to meet?
It can not be said exactly because something changes every day, new standards, rules and acts appear. Currently, we are preparing the construction of Hanhikivi nuclear power plant in Finland – we are in the phase of designing, site preparation and licencing. In parallel, in the near future the construction of Hungarian Paks NPP will be started. Before the construction in the Czech Republic starts, we will have gained broad experience with construction in the European Union. Although each country has specific standards, they are increasingly closer and closer to each other. It is important for us that Russia and the Czech Republic have been cooperating for decades and in the nuclear power sector we have not established such an intensive cooperation with anybody else.