The nuclear lobby could be forgiven for thinking that Martin Kuba is an environmentalist and/or an agent of Austrian intelligence, such is his incompetence in preparing the legal framework for Temelin.

Over the last four years, Candole Partners has published research explaining why Temelin 3&4 is bad both for Czech consumers and for shareholders in CEZ. Once considered maverick, our views have now become almost main stream. And we are not even shareholders in CEZ, unlike some local commentators keen to protect their investment by urging the government to drop the whole project as a waste of money.

In the commentary below, my colleague Jan Ondrich looks at the Temelin 3&4 project from the perspective of the nuclear industry itself. He argues that the project has been badly mismanaged from the outset , a state of affairs for which Martin Kuba, as industry & trade minister, and Miroslav Kalousek, as representative of the majority owner of CEZ, and indeed the entire management and supervisory board of CEZ, should be held responsible.


The Czech government has declared its commitment to build two new units at Temelin. And yet its oversight of CEZ has been muddled at best. To this author at least, the government appears to be doing everything possible to make the project fail, albeit unwittingly.

Common sense would lead one to suppose that the government, having once defined its aim to build a new nuclear power plant, would immediately then set about estimating the basic economic parameters of the project. It would do so in order to determine whether CEZ had the resources to complete such an undertaking.

An objective inspection of the firm would have soon revealed that CEZ, thanks to its mismanagement under Martin Roman, no longer has the capacity to handle such a project (see our 2010 study entitled CEZ unplugged). The management would have been removed, and the new lot would have abandoned the pretense that CEZ has the financial strength to buy any number of new reactors in cash.

Instead of showing off, the firm’s CEO and CFO would have devoted themselves to understanding and identifying the conditions under which CEZ should and would be willing to take on such a risky project (with a strategic partner perhaps), as well as the conditions under which banks might be willing to provide financing.

A serious and cautious management team would have known full well what we pointed out in our 2011 study entitled ‘Temelinomics’, namely that without a form of state aid, no one would be willing to finance the Temelin project.

And so the government would have prepared different versions of possible state aid well in advance, and it would have embarked upon the laborious task of negotiating these proposals in Brussels. And after the government was clear about the conditions under which Brussels was willing to approve such support, it would then have prepared a draft law for the Czech parliament’s consideration, which would be compatible with the Commission’s views.

Above all, the state support proposed would not have been discriminatory, and nor would it have strengthened the dominant position of the national champion at the expense of other market participants. Assuming the government had been able to draft such a law, and that it had managed to get it passed in parliament, the European Commission would then have ratified it -hopefully.

Nothing would have prevented the Czech government from drafting a tender for the construction of a nuclear power plant in the Czech Republic. The tender could have been an auction, with the winner being the company capable of building a nuclear power plant for the lowest amount of state support. The fact that the land (on which the power plant would be built) is owned by CEZ would not have been a problem. The government, being the majority owner, could have chosen to sell or lease the land and infrastructure to the winning company. CEZ would have won such a tender by default –the credibility gap of this government is far too great for any commercially driven foreign company to leap. CEZ (together with a strategic partner perhaps) would then have tendered the suppliers of technology and started construction.

Who needs a terrorist or a tsunami to wreck the nuclear industry?

So much, then, for what might have been if common sense had prevailed. Instead, the Czech government and management of CEZ appear to be doing their level best to torpedo the project.

First, they appear blind to the fact that the construction of a nuclear plant is a very capital intensive project, and that CEZ, for all its other strengths, is not capable of financing it. Furthermore, the government appears blissfully unaware of the possibility that wholesale electricity prices and demand might stagnate, or even decline. Such a scenario is completely absent in any version of the State Energy Strategy (perhaps even in the business plan of CEZ as well.) It seems that successive Czech ministers and their deputies inhabit a world of infinite exponential growth. This fantasy has allowed the management of CEZ to tender Temelin’s technology supplier without having secured financing.

A running commentary on the last twelve months would go, somewhat breathlessly, like this:

The management of CEZ finally admits that it does not have the money. It begins frantically to look for ways to secure financing. Aborting the tender because of financing issues is too embarrassing. CEZ discovers that it cannot find a strategic partner or secure debt financing without state guarantees. It starts lobbying the government.

Someone at CEZ reads the London Financial Times and notices that the British government is considering state support in the form of so-called “contracts for difference” (the difference between the market price and the price set by the regulator for electricity produced by nuclear plants). The Czech government, under pressure, agrees to copy the British approach.

Minister Kuba boasts that he will draft and pass a law on nuclear state aid, which will supposedly be approved by the European Commission, since the Commission already approved the British plan. The schedule of the tender will supposedly not be affected. And so on.

What a circus! Does Mr Kuba really believe that he can draft a well-written law and get it passed, at least in a democratic way, in less than a year? Assuming no problems –or better said a pliant Opposition and a super efficient civil service, the process will take a year at minimum. It would take at least another twelve months for the Commission to study the law and to comment upon it. And it would require at least another year again to amend the law, so that it meets the Commission’s requirements and to allow time for the necessary decrees and ordinances to be prepared (assuming the Commission does not reject the law out of hand).

So, an optimistic scenario would allow at least 3 years for the whole procedure.

No one, not least the nuclear industry itself, can take this government seriously. It seems to this author at least that the Czech government and CEZ may very well lose the last remnants of its credibility thanks to its circus act called ‘Temelin’, and that in consequence no one will be willing to provide financing. The project will end infamously or be postponed indefinitely.

The nuclear industry, which has not enjoyed much good news in the recent past, especially in Europe, badly needs a well managed project that would demonstrate that nuclear power plants can be built and operated competitively and safely. Alas! Temelin is not such a project. In our opinion, it will be go down in history as the Czech equivalent of Cernavoda in Romania and Belene in Bulgaria –exorbitantly costly flops.

And consider the longer term consequences if Temelin ends in fiasco. It would complicate the construction of other nuclear projects in Europe, particularly if the Commission rejects it based upon an amateurish request for nuclear state aid. What an irony it would be if the Czech government and CEZ drive another nail in the nuclear industry’s coffin, after Fukushima Daiichi and the German Energiewende.

I am genuinely perplexed. Why should a government led by the likes of Martin Kuba and Miroslav Kalousek, and the management and the supervisory board of CEZ, be so adept at harming the nuclear industry?

Could it be that they are closet environmentalists –or even agents of a foreign power run from Vienna? No. The reality is they are just incompetent.

With friends like these, who needs enemies?