January 22, 2015 / 4:52 PM / 3 years ago

UPDATE 1-Czech nuclear plant expansion likely to be handled via CEZ subsidiary -minister

(Adds details, quotes)

By Robert Muller

PRAGUE, Jan 22 (Reuters) - The expansion of the Czech Republic's nuclear power plants will probably be handled through a subsidiary of state-controlled utility CEZ, a government minister said on Thursday.

Industry Minister Jan Mladek told Reuters this was the most likely model the government would support as it was the best way to allow the project supplier to potentially share in the risk.

CEZ, 70 percent owned by the state, scrapped a tender to expand its Temelin nuclear power plant worth more than $10 billion last April because of low wholesale power prices and the state's refusal to provide price guarantees.

That tender saw Toshiba's Westinghouse unit pitted against Russia's Atomstroyexport after France's Areva had earlier been disqualified for not meeting requirements.

All three have expressed interest in a new tender and may be joined by bidders from South Korea and China.

The industry and finance ministries have recently completed a joint report on the country's nuclear power plans, weighing whether the expansion should be undertaken by CEZ, a consortium of investors or a completely new state entity.

"The most probable option is a subsidiary of CEZ because that is the most painless one, as it allows for the entry of the technology supplier, but only into the blocks, and not into CEZ as such," Mladek said during a break in a parliamentary session.

He said the technology supplier could control up to 49 percent of the special vehicle or subsidiary and share risks.

Central Europe's largest utility CEZ has held off on re-starting any formal tender process while the centre-left government defines its energy strategy.

The country is relying on nuclear power to secure its future energy needs, even as neighbours like Germany turn away from atomic energy.

Construction is not expected before 2025, according to the ministries' report, seen by Reuters.

The report backs using CEZ or a subsidiary as the best option. It calls for up to four nuclear power units to be built, with two units priced at 250 billion-300 billion crowns ($12.52 billion).

But the study does not come to any conclusions on what state guarantees might be provided.

Mladek said the length of the preparations and construction of the new blocks complicated the process of determining whether to guarantee future prices of electricity they produce.

"On one hand, (the project) does not make sense with the current (electricity) prices. On the other, we are talking about a nuclear block which will produce electricity from 2030 to 2090, or more likely from 2035 to 2095, where we know nothing about the (future) prices," he said. (Editing by Jason Hovet and Jane Merriman)

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