Czech $10 Billion Nuclear Project Splits Cabinet Parties

Czech government parties clashed over a $10 billion project to build new nuclear reactors as the plan pit the finance minister against the prime minister.

The expansion of the Temelin nuclear power plant is becoming a focus of political disputes one year before general elections after Finance Minister Miroslav Kalousek said he has doubts the project is an “efficient” investment. Premier Petr Necas likened Kalousek’s comments to those of an “accountant” failing to address long-term strategy.

CEZ AS, the Czech Republic’s largest power utility, is in the process of choosing a company to build two new units with at least 2,000 megawatts of capacity at Temelin. Westinghouse Electric Co. and a Russian-Czech group led by Rosatom Corp. are bidding, while Areva SA’s offer was excluded in October. The Prague-based and state-controlled CEZ plans to sign the contract by the end of 2013.

“Original calculations for Temelin were based on much higher electricity prices than what they are now,” Kalousek said, according to a transcript of an interview published by Hospodarske Noviny today. “The second criterion is the price. And I have to say that we were very unpleasantly surprised with bids from both contenders.”

Kalousek is a member of the TOP09 party, whose priorities include curbing the budget deficit below the European Union’s limit of 3 percent of economic output. Necas leads the Civic Democratic Party, which fostered austerity measures such as raising some taxes to curb growth in state debt.

Compensation System

CEZ wants to negotiate a compensation system with the government that would ensure the power plant’s profitability. Necas said yesterday the country’s energy strategy is “hard to imagine” without building new reactors at Temelin. The nation must replace 1,800 megawatts of power-generating capacity from expired conventional energy sources by 2020, Necas said.

CEZ Chief Executive Officer Daniel Benes said today in Warsaw that Temelin will be built “because it’s necessary.”

Kalousek’s comments were his personal views and not the government’s position, Necas said today at a news conference aired by public broadcaster Czech Television.

“There is a big difference between an accountant, a politician whose intellectual horizon reaches an annual account book or one election term, and a statesman, who is thinking about what will be happening in the country in about year 2030,” Necas said.

Before it's here, it's on the Bloomberg Terminal.