Timeline of Korea's nuclear reactor deal with Czech Republic remains unclear

Dukovany Nuclear Power Station is seen in Dukovany, Czech Repubilc, Friday. AFP-Yonhap

Concerns are rising that a Czech court’s temporary halt to a nuclear reactor construction deal between Korea and the Czech Republic may be prolonged, with both governments unaware when the court will make a decision on whether to allow the deal to proceed or not.

While the high-profile delegation from Korea was already heading to the European country to sign the deal when the court issued the injunction, the Korean government is trying to downplay the diplomatic discourtesy, showing optimism for the final deal.

The concerns came after a local court in the Czech Republic issued the injunction Tuesday to prevent the country's main electricity firm, Czech Power Company (CEZ), from signing a 26 trillion won ($18.6 billion) contract with a Korean consortium, led by Korea Hydro & Nuclear Power (KHNP).

The deal was to build two 1,000-megawatt nuclear reactors at Dukovany Nuclear Power Plant, the biggest public procurement project in Czech history and Korea's first nuclear reactor export since 2009.

The court granted the injunction by accepting a complaint from the losing bidder, France's EDF, for review. This decision came a day before the signing ceremony between KHNP and CEZ’s subsidiary Elektrarna Dukovany II (EDU II). For the ceremony, high-profile government figures, including Industry Minister Ahn Duk-geun, Land Minister Park Sang-woo and Rep. Lee Chul-gyu of the People Power Party, who is the chair of the parliamentary industry committee, were on their way to the European country.

Offering reassurances that it hopes to continue the project with KHNP as planned, CEZ announced during a briefing Wednesday that it will appeal the injunction, noting it will seek damages caused by delays.

"Given the gravity of this matter, I expect the court’s prompt handling. And in my opinion, I expect the Supreme Administrative Court will rule in our favor because we are legitimately qualified for the security exception. The Office for the Protection of Competition also reached the same conclusion, and I hope the Supreme Court will accept our argument,” CEZ CEO Daniel Benes said.

Industry Minister Ahn Duk-geun, right, speaks during a press conference in Prague, Czech Republic, Tuesday (local time), alongside Korea Hydro & Nuclear Power CEO Whang Joo-ho. Courtesy of Ministry of Trade, Industry and Energy

After the signing was canceled, Ahn, during a press conference after arriving, noted that while a delay is inevitable, he sees no reason for the Czech Republic to hold up the project excessively as it would come at enormous opportunity costs.

However, he admitted it is hard to determine whether the delay could be for “days or months.” With both countries about to face major political events, the deal’s timeline is up in the air. Korea is set to have an early presidential election on June 3, while the Czech Republic will have a parliamentary election in October, events that might bring a shift in administrations in both countries.

If either of the new governments decides to review the contract, the deal's finalizing could be further delayed, interfering with the original plans to begin construction in 2029 and complete it by 2037.

Czech local media forecast the court could reach a final ruling in six to eight weeks if all the involved parties come to a settlement, but it will take six to eight months if it goes to a formal lawsuit.

KHNP remains cautious in examining the situation. “It's still difficult for us to confirm exactly how long the timeline will be,” a KHNP official said.

“Since it depends on the Czech court’s decision, there's already talk that CEZ will file a counter-lawsuit to dismiss the case.”

When asked if KHNP is reviewing whether to take its own legal actions regarding the delay, the official said no such considerations have been made yet.

Last year, CEZ picked KHNP as the preferred bidder for the nuclear power project, giving KHNP its first European project. Since then, EDF has made multiple challenges to overturn the decision, claiming there was misconduct in the selection procedures.

KHNP denied the accusation saying it deeply regrets “the competitor’s continuous attempts to undermine the bidding results” despite the Czech’s Office for the Protection of Competition (UOHS) rejecting EDF’s complaints.

CEZ also refuted EDF's complaint, confirming that it has evidence showing that the bidding process was held fairly and transparently. It noted CEZ had multiple high-level negotiations with EDF and explained improvements EDF needed to win the bid.

"At that time, the head of the (EDF's) negotiation team knew it was not a strong bidder. Despite our detailed explanations multiple times, they did not reflect the issues we pointed out in their final bid and did not make improvements," CEZ's Chief of the New Energy Division Tomas Pleskac said during its briefing.