EC asks Czechia to put off signing Dukovany deal

Brussels/Prague, May 12 (CTK correspondent) - The European Commission (EC) asks Czechia to put off the signing of the contract for two new nuclear units at Dukovany, as it is investigating whether Korea's KHNP received foreign subsidies that may distort the EU market, according to a letter CTK had the opportunity to see.

EC vice-president Stephane Sejourne sent the letter to Czech Industry and Trade Minister Lukas Vlcek.

The signing of the final contract has also been blocked by the Regional Court in Brno. The tender was won by KHNP, while French company EDF was unsuccessful.

Daniel Benes, the head of semi-state energy group CEZ, the operator of the Dukovany nuclear power plant, said in reaction today that the letter is dated May 2 and Vlcek should respond to it soon. "But I am convinced that the Czech Republic should reject what is in the letter," Benes said.

"It is hard to believe that there is an investigation going on when no one asks you any questions. The French will do everything to prevent such a plant from being built. It is not about winning, but about not building a power plant here, and that is dramatic news for the Czech Republic," Benes said.

In a statement received by CTK, EDF said it had never acted with the intention of disrupting Czechia's nuclear programme. It is exercising its legal right to raise legitimate concerns about the legality of a competitor's bid under EU law, EDF said today.

EDF is "aware of the importance of the success of the Czech nuclear project and supports its implementation with at least 60 percent participation of local industry, in full transparency and in compliance with Czech and European legislation," the company said, reiterating its readiness to negotiate with CEZ and the Czech authorities as necessary.

The EC has already initiated a preliminary review to assess whether potential foreign financial contributions received by the Korean firm constitute foreign subsidies and, if so, whether these foreign subsidies distort the EU internal market.

As part of the preliminary review, the EC asked for information from CEZ and Dukovany, as well as from KHNP, but the parties have not yet provided sufficient information in response to these requests, the letter of May 2 says.

On the basis of the information provided, as well as other information uncovered by the EC services in the framework of the preliminary examination, there remain significant indications that foreign subsidies have been granted to KHNP which may distort the internal market, the letter adds.

The EC has stressed that it does not prejudge the final decision but is currently preparing a decision to open an in-depth investigation. The Commission therefore asks the Czech Republic to cooperate until a final decision is taken and to postpone the signing of the contract.

The review concerns the Czech Republic's compliance with the Foreign Subsidies Regulation (FSR) of 2022. The duty of loyal cooperation requires the Czech Republic to avoid any situation that would irreversibly conflict with the concerns raised in this letter and that could have irreversible effects that would impede the effective application of the FSR, the letter states.

In conclusion, Sejourne stresses that neither the request nor the inquiry is in conflict with the Dukovany) project. On the contrary, the intention is to provide legal certainty and ensure that the rules of the EU internal market are respected, he adds.

tam,hel/er