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THE CZECHS CUT PRICE AND TERM FOR BELENE NUCLEAR PLANT

The Czech Skoda Alliance submitted an improved offer for the construction of the Belene nuclear power plant to the National Electricity Company (NEC). The news was announced at the official opening of the new website of the Czechs on August 2. According to Jiri Demis, Sales Manager of Skoda Nuclear Engineering which is the leader in the Czech consortium involving Skoda Praha and the Rez Institute for Nuclear Research, the new offer was put in a sealed envelope with an explicit requirement that it should be opened simultaneously with the improved offer of the Russian rival Atomstroyexport when it is received. In the end of July when the deadline for choosing a winner in the nuclear competition expired, the Minister of Economy and Energy, Roumen Ovcharov, declared both offers unsatisfactory and requested that the price and term for plant construction be improved. Both applicants proposed two main alternatives: the first block will be built on the existing ground in Belene and the equipment delivered there will be used, while the second block will be entirely new. The two companies proposed as an alternative the building of two brand new nuclear blocks.
The investor NEC postponed the final decision with a month.
It remained unclear how much exactly the Czech offer had been improved. Mr. Demis only said that the price was quite standard and meets the European practice. As the BANKER weekly learned, however, the Czechs have filed down their price offer to the sensible minimum. In practice, it means that for all prices below this level the executor will be forced to finance by himself separate stages of the project for construction of the nuclear station. According to experts, a risk of the kind can only be taken by a company chasing not economic but other purposes, mostly political ones.
Skoda Alliance representatives commented Roumen Ovcharov's statement that the price of completion of the Belene nuclear block frozen in 1990 could not be approximately equal to the value of entirely new construction. The consortium has a clear idea of what part of the available equipment it will use for sure, what part it will use partially, and what part it could not use at all, Jiri Demis said. He specified that the reactor, the steam generator, some of the cranes and the pipes will be used for certain. However, the Czech manager refused to reveal the proportion among the fit, partially workable and the totally unfit equipment. He only explained that it was included in their offer. If the state insists that some parts of the already delivered equipment be used at all costs, it must guarantee for them, because Skoda Alliance prizes its reputation, the head of the Belene Czech project, Roman Zdebor, said.
If the price of completing the first block looks close to the value of construction of the second one, we should say that the appliances delivered for the Belene nuclear power plant are morally outdated, Mr. Demis added. His colleague Roman Zdebor explained that it would be incorrect to conclude that most of the equipment available on the ground of the future power plant was unfit. Josef Misak from the Czech Institute for Nuclear Research said that when it comes to projects for nuclear power plants, no comparison can be made between prices for a kilowatt installed because they depend on too many factors. For example, whether the financing is borrowed, whether it is insured, whether the state donates the construction to some extent. It also depends on the construction term. For instance, when more capacities are installed at one place, the price is lower, Mr. Misak noted. Experts explained that when a nuclear power plant is built, the first block is always the most expensive one because its construction is accompanied by the whole auxiliary and electric economy of the future plant. And usually they cost about 40% of the price of the nuclear block. Respectively, all following nuclear capacities on the same ground are cheaper by the same amount.
It became clear last week that the Czechs took into account the requirements of the Bulgarian state to cut the term for construction. Their final offer is that the first block of the plant will be completed in six years. The same was also stipulated by their previous improved offer, since late last May NEC demanded that the 8-year term planned by the procedure be shrunk. We definitely cannot shorten the term for the first block any more, it is not real, the head of the Bulgarian project Zdebor said. He added that Skoda Alliance had cut the time for building the second block. According to initial calculations, the block had to be ready in ten years, then NEC asked the term to be shortened to eight years, and now the Czechs propose seven years and a half. However, representatives of the Czech consortium explicitly underlined that cutting the terms for construction of the nuclear capacities also depends on the state's assistance in the licensing procedures for the ground, the construction, the tests and the installation.
It also became clear that the new offer deposited by the Czechs presents a schedule of the accelerated construction. Roman Zdebor added that Skoda Alliance is already negotiating the new terms with executors and suppliers. It was announced that if the Czechs win the competition, Bulgarian companies will undertake 35% of the project, even though the tender procedure requires Bulgaria's involvement to be up to 30 per cent. The names of a few well-known Bulgarian companies were mentioned: Atomenergomontazh, Atomenergoremont, Atomtoploproekt, Besttechnika, Electrical Systems, Enemona, Energomontazh, EnproConsult, Giti Bulgaria, Glavbolgarstroy, Orion 5K, Risk Engineering.
Moreover, the Czech offer allows Bulgaria to choose the supplier of nuclear fuel. It only fixes that the Russian Tvel will provide the first nuclear fuel supply and the price of this delivery is included in the offer of Skoda Alliance.
In the meantime, the Russian Gazprombank made an official announcement refuting the statement of some Bulgarian media that the bank of the Russian gas giant holds considerable stakes in the Russian machine building holding OMZ which includes Skoda Nuclear Engineering. It was also clarified that companies from the Gazprombank group control less than 31% of the shares of the Russian Atomstroyexport which is the second applicant in the Bulgarian nuclear competition.

Skoda Nuclear Engineering began to produce EPR reactor internal components for the new nuclear block of the Olkiluoto, Finland, power plant. Being subcontractor of the French concern Areva, the Czech company will deliver block equipment of 1,600 megawatt capacity.
Skoda Nuclear Engineering won the tender in competition with four other applicants. Some of the main components, subject to the delivery, are the shaft of the reactor and the reflector of the active zone. Last year the company won a tender for a contract to produce and deliver the supporting ring upon which the body of the reactor of the same plant will be put.
The Czech company will supply the internal components of the reactor in the early 2008. The new Finnish block should begin supplying electricity in 2010.

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