Temporary Suspension of Czech Nuclear Power Plant Contract Causes Stir, Investigation Expected to Take Over 60 Days

CEZ Group and KHNP, "Negotiations Continue"

President Yoon Suk-yeol shakes hands with Czech President Petr Pavel after a joint press conference between Korea and the Czech Republic at Prague Castle, Czech Republic, on the 19th (local time). (2024.9.20)
[Image source=Yonhap News]

Regarding the temporary suspension of the nuclear power plant contract between Korea and the Czech Republic by the Czech competition authority, the parties involved, Czech Power Company and Korea Hydro & Nuclear Power (KHNP), stated that negotiations will continue independently of this measure. This is because the action taken by the Czech competition authority is merely an administrative measure following objections from competitors and does not imply any illegality of the contract itself. However, if the investigation period by the Czech competition authority is prolonged, there is a possibility that negotiations and the contract could be disrupted.

According to foreign media on the 31st, the Czech Office for the Protection of Competition (UOHS) recently imposed a temporary suspension on the Dukovany nuclear power plant contract between Czech Power Company and KHNP. In this regard, a spokesperson for the Czech Office for the Protection of Competition told the local news agency CTK, "Based on objections from ?lectricit? de France (EDF) and Westinghouse, we have taken precautionary measures," adding, "This prohibits the signing of new nuclear power plant construction contracts through bidding."

However, this measure does not mean that the nuclear power plant contract itself is blocked. The spokesperson for the Czech competition authority explained, "This does not indicate how the measure will be decided," and "The matter has not yet been legally determined, and this is a standard procedure taken when there is a risk of compromising administrative processes."

In other words, since the competition authority cannot intervene after a contract has already been signed amid objections from competitors, this is a precautionary measure to temporarily suspend the contract signing.

After the Czech Republic selected KHNP as the preferred bidder for the new Dukovany nuclear power plant construction project in July, Westinghouse and EDF, who competed against Korea in the bidding, officially filed objections with the Czech competition authority. As leading nuclear power companies representing the United States and Europe respectively, it seems the Czech government could not simply ignore their objections.

Due to this measure, the Czech Republic and KHNP cannot finalize the contract until the legality of the bidding is conclusively determined. According to Czech law, investigations should generally be completed within 60 days, but this case may take longer. The Czech Power Company explained, "Due to the complexity of the project, it may take more than the legally stipulated 60 days."

Despite the contract suspension by the Czech competition authority, Czech Power Company and KHNP plan to continue negotiations. Czech Power Company stated, "This measure will not affect the negotiation schedule," and "We aim to conclude negotiations by March 2025." The company also emphasized its confidence that there were no issues in the bidding process.

KHNP also explained, "The Czech Office for the Protection of Competition took precautionary measures following complaints from competing bidders, according to standard procedures, and this is unrelated to how the office will decide on the review of the competitors' complaints in the future," adding, "Regardless of the precautionary order, we plan to proceed smoothly according to the previously established procedures and schedule, aiming to sign the contract by March 2025."

KHNP further stated that it will maintain close communication and cooperation with Czech authorities, including providing detailed explanations of Korea’s position if requested by the Czech side.