UPDATE 1-CEZ signs framework deal with Czech state for new nuclear unit

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PRAGUE, July 28 (Reuters) – The Czech government signed agreements with CEZ on Tuesday for a planned multi-billion dollar expansion of the majority state-owned utility’s Dukovany nuclear power plant.

The agreements cover the overall general framework of the project and its initial phase, including a tender in which CEZ will have a preferred list of suppliers by 2022 and sign a contract with one by 2024.

The Czech Republic has been a strong backer of nuclear power even as many in the European Union shift to renewable energy, including neighbouring Germany. The Czechs argue nuclear is a carbon-free alternative.

The state, which holds a 70% stake in CEZ, last week approved plans to give an interest-free loan for the roughly 1,200 megawatt unit.

It has also approved a model to buy electricity from the new unit at a determined price, with consumers making up the difference if that price is higher than wholesale market prices.

The plans need approval from the European Commission to ensure they meet EU state aid rules.

Officials have estimated a 6-billion-euro ($7.04 billion)price tag for the new unit. Critics, including some CEZ minority shareholders, argue costs could easily exceed that.

CEZ said it aimed to launch a supplier tender by the end of the year.

Construction should start in 2029, when the bulk of costs will start, and the new unit is expected to be operational in 2036.

Russia’s Rosatom, China’s China General Nuclear Power, France’s Electricite de France, South Korea’s KHNP, U.S group Westinghouse, and a joint venture between France’s Orano – formerly known as Areva – and Japan’s Mitsubishi are expected to participate in a tender to build the plant.

Czech and security officials have advised the cabinet to keep Russian and Chinese firms out of the deal, but the cabinet has insisted on keeping all interested parties involved to try to ensure competitive bids. ($1 = 0.8524 euros) (Reporting by Jason Hovet; editing by Emelia Sithole-Matarise)

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