South Korea’s KHNP was awarded contract ahead of EDF and Westinghouse
Brussels has cited a “significant” risk that the South Korean company that won the contract to supply two new nuclear power plants for the Dukovany site in the Czech Republic may have received unfair state support.
Korea Hydro & Nuclear Power (KHNP), a subsidiary of state-run Kepco, was awarded the contract ahead of France’s state-owned EDF and Westinghouse of the US.
But Brussels has asked the Czech government to pause the contract, pending a decision under the bloc’s foreign subsidies regulation, which is designed to protect EU companies from heavily subsidised foreign competitors.
In a letter on 2 May, the EU’s internal market commissioner, Stéphane Séjourné, said there were “significant indications” that KHNP had benefited from state aid that would distort the bloc’s internal market and give it an unfair advantage over European competitors.
The letter, which has been widely reported, said going ahead with the contract would jeopardise the commission’s ability to investigate the matter.
A Czech regional court put the contract on hold on 6 May after an appeal from EDF, which said the contract would set a precedent allowing the South Korean company to bid aggressively for other European contracts.
An EU official was reported as saying that Séjourné, who is French, was intervening purely in order to enforce EU legislation and was not seeking to defend his nation’s interests.
Czech news agency CTK quoted Czech prime minister Petr Fiala as saying that while the letter was from the commissioner, it did not represent the commission’s official position and had no binding effect.
Euractiv reported that a commission spokesperson told journalists on 12 May that Séjourné’s letter was “absolutely not a request to put things on hold”.
Czech Company Says Subisidies Claim Is ‘Speculation’
The Czech company in charge of the reactor project, Elektrarna Dukovany II (EDU II), issued a statement defending the selection process and calling on EDF to publish the offer it submitted during the tender.
EDU II, a subsidiary of Czech state utility ČEZ, said it is ready to “seek full compensation for damages” and protect shareholder value against litigation.
The statement described the claims of illegal subsidies “speculation by the unsuccessful bidder”.
South Korea and the Czech Republic have reaffirmed their commitment to signing the nuclear power plant contract, despite the court ruling.
According to press reports, at a cabinet meeting on 7 May the Czech government said EDU II would proceed with the contract to build two nuclear reactors with KHNP at the “earliest possible timing”.
The two new large-scale APR1400 plants, supplied by KHNP, will be built at the existing Dukovany nuclear power station site in the southern Czech Republic about 50 km from the border with Austria.
The deal, originally planned to be signed on 7 May, was postponed after a court injunction was granted in response to a legal challenge by EDF, an unsuccessful bidder in the tender.
