Temelín: Strategic Growth Project for Russian-Czech Relations

Temelin: Strategic growth for Russia-Czech Relations

Czech Prime Minister Petr Nečas arrived in Russia on a four-day working visit late May, 2013. Trade and energy policy are among the topical issues for Prague and Moscow – 6% increase in turnover is good news for both parties. Infrastructure investment projects like Temelín nuclear power plant could be the cornerstone of successful bilateral cooperation. Temelín NPP means not only thousands new jobs, but also affordable energy for the Czech industry. It can truly be a safety net in times of European economic meltdown.

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Recent visit of Czech Prime Minister Petr Nečas to Russia resulted in signing a number of memorandums and agreements on hydropower, combined-cycle power plants and other large-scale projects of mechanical engineering. Partnership for high-tech development also includes one crucial nuclear energy project in a small village of Temelín in southern Bohemia. The Temelín Nuclear Power Plant, with its 2,000 MW of installed capacity, is the largest power resource in the Czech Republic and a profitable business opportunity.

The stakes are high: tender winner will have to double NPP’s energy output building two new reactors by 2017. Both units are to be completed in 2025 and should produce electricity for 60 years. Czech industrial sector is in need of stable and affordable energy source to boost national GDP in the middle of crisis-stricken European Union (now industry accounts for 40% of Czech GDP and employment).

The French company Areva participated in the tender process through last October but had to leave it. ČEZ Group, the policy-maker in the Czech Republic on energy issues, eliminated Areva’s bid citing serious mistakes. The French are currently trying to challenge the decision in the Office for the Protection of Competition (UOHS), but Czech experts believe Areva’s chances to open an antitrust procedure are rather slim. Eventually US-Japanese corporation “Westinghouse-Toshiba” and Russian-Czech engineering consortium of “Skoda JS”, “Atomstroyexport” and “Gidropress” have come through to the tender’s finals.

The Czech financial regulator is now working to bring down the prices. On a more subtle level there is also a political rivalry going on between Prime Minister Nečas (Civic Democrats, “ODS”) and Finance Minister Miroslav Kalousek (Conservative “TOP 09”). “I must say that offers of both bidders surprised us very unpleasantly in terms of price,” Kalousek said to the “Hospodarske Noviny” newspaper earlier in May.

“The tender will be transparent and the best bid will win,” Prime Minister Nečas announced in Moscow on May, 28. The Czech Republic “absolutely welcomes the participation of the Russian-Czech MIR.1200 consortium in tender procedures to complete the two Temelín NPP units,” he confirmed. Russia treats Czech Republic as a traditional partner and plays with an open hand. “If we are able to prove the solidity of our position, Czech companies will receive very significant orders worth up to 6 billion euro,” Russia’s Prime Minister Dmitry Medvedev said to the press.

Considering the volume of Czech business community’s net investments to Russia, this highly pragmatic scenario appears to be the most probable. First, the power core of Temelín NPP that needs an upgrade is the Soviet- designed VVER1000 reactor. Russia can ensure consistency of operations which is extremely important in such technology-intensive project. Second, Russia’s engineering solutions are well-known to be robust and stable – an important feature in densely populated Europe.

However, the US-Japanese nuclear giant Westinghouse-Toshiba does not lose hope despite its shattered public image after the Fukushima tragedy. Westinghouse’s European branch vice-president Mike Kirst said in reaction to Dmitry Medvedev’s words that the corporation would not officially comment on Russia’s move. This strategy of silence could be a part of a cunning PR strategy. The US has a long history of aggressive unofficial lobbying for its transnational corporations[1]. For example, Monsanto’s notorious PR-activity abroad has recently caused global citizen protests.

In December, 2012 Hillary Clinton visited Prague in attempt to save the situation for Westinghouse. “Who reaps the benefits?” – asked Democratic Party activist Tom Gallagher half a year ago following Czech-US talks. Westinghouse-Toshiba spends about $2,000,000 annually lobbying Washington to remind the “right” people on the Hill that it is a loyal American company. The US State Department’s international lobbying for the corporation could be easily explained to the American citizens as “protecting their national interests”. When some see it is right to invest in publicity, inhabitants of small towns and villages in Bohemia, where reactors are planned to being built, would obviously prefer construction companies to put money on modern safety actuation systems.

The final contract is to be signed by the end of 2013, but the licensing and design phase will run 44 months after the agreement’s signing. It should be a matter of national consensus in the Czech Republic that Temelín NPP is a too serious strategic issue to be a subject of disputes between two ruling parties. Prime Minister Nečas guaranteed the tender transparency, therefore market will decide on the future of Temelín.

Igor Alexeev is a Russian journalist and blogger for Strategic Culture Foundation, Asia Times Online and Route Magazine. He writes on the oil and gas sector, Eurasian energy security and shipping industries in the Arctic.


[1]    In 1974, Westinghouse was accused of paying a bribe (“sales commission”) to Philippines President Marcos’s golf partner Hermini Disini to influence him to build Bataan NPP.

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One comment

  1. Pingback: Nuclear News Round Up (3rd June – 7th June 13) | Assystem Energy & Nuclear

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