Homepage News We’ve won contracts for five billion crowns

We’ve won contracts for five billion crowns

Date: 6. 3. 2015

Source: Právo

ŠKODA JS CEO Miroslav Fiala said to Právo Daily

What impacts had the decision to cancel the tender for the completion of Temelin nuclear power units on Škoda JS?

Our firm had to use the best people it employs for this potential job and for making a bid. The negative impact was that almost one hundred best brains devoted their efforts to that offer and could not focus on anything else. These rigmaroles around the tender have cost our firm around 250 million crowns in direct costs, with the expenditures of the whole MIR.1200 consortium of which we were a member being naturally much higher. We also had to reserve a production capacity for the case of winning the tender. Unfortunately, the law does not provide any cost compensation for participants in cancelled tenders. Moreover, the individual participants invested huge amounts of valuable information in their offers.

What impacts can this decision have on the credibility of the Czech Republic?

The decision to cancel the tender definitely does not inspire confidence in the entrepreneurial environment in the Czech Republic, as the procedure lasted for five years only to be cancelled for reasons unclear to the supplier sphere. If a company with a high participation of the state invites for tenders, it simply cannot gamble with it like this politically. Also, I venture to state that to invite for tenders of such a scale according to the current Public Procurement Act is an attempted suicide, so to say. This act must be abided by any clerk in a small village when planning to build a bus stop shelter worth a couple of thousands, as well as by any investor inviting for tenders for hundreds of billions of crowns. For example, near Chotíkov at Plzen, a great waste incineration plant for the City of Plzen was started to be built. After a long-lasting preparatory procedure, when Plzeňská teplárenská as an investor obtained all the permits it needed, they started the construction. After they invested 1.5 billion crowns, activists found lawyers and filed an action with a court that stopped the construction. But Plzen needs the plant and the approach of the authorities is tragic. I recall the English term NIMBY (never in my back yard), which expresses the situation when all agree to public beneficial projects but no one wants to have them on their property. The Public Procurement Act gave those opponents an extraordinary power. Suppliers, engineers, designers, and people in particular, that is all parties interested in work success, are brought down by individuals organized in similar groups assisted by bad laws.

Are you ready to take part in a new tender if invited?

Our firm has been in nuclear power engineering for almost 60 years. We will be surely interested in all orders concentrated on this sphere. It is hard to say in what form we would participate, but if any such procedure takes place in the Czech Republic, then not only our firm but the whole Czech power industry will be interested.

How do you comment the approach of the state to the support of the Czech industrial enterprises?

The state as well should be interested in supporting the Czech industry. We are an industrial country; the government should realize that. Statements saying that we should not prefer the Czech industry seem to me like the practice of a bad manager. If I am a farmer and have a plough and a tractor of my own and I need to plough up a field, then, according to this approach, I should leave the machines becoming rusty in the barn, procure someone to do the work with his own tractor and plough, and to pay him well for it.

What was the economic result of Škoda JS for the last year and what is the forecast for this year?

We will know the 2014 results in the course of April. I can say now that revenues will reach 3 billion crowns and the operating profit will be in the order of 100 million crowns. In comparison with the year 2013, the result will be a little lower. There are several reasons for this, namely the impacts of the cancelled Temelin tender on the one side and, on the other, the considerable inertia of nuclear power engineering, which still responded to the Fukushima event in the last year, with the global volume of orders being lower. But we were always in the black in the last 10 years and the 2014 results follow the line.

How do you perceive the support of export by the state to Czech firms?

Lately, I got a feeling that it would not be problem for the state institutions to support orders implemented on the “right” side of the world, i.e. in the West. But you don’t need any special support for export to such countries. On the contrary, it is needed to export to countries on the other side of the world. Our firm has won considerable orders and great prospects in Ukraine, where the state power company Energoatom is our key customer. We expected to sign several contracts worth 1 billion crowns with this firm this year. It was until the beginnings of the local political instability that our export to Ukraine was supported by the Czech Export Bank and EGAP in the form of a credit for the customer, which repaid the borrowed funds gradually through its bank. For the last five years, Energoatom always repaid the Czech Export Bank. It is a firm that generates and sells electricity, which means that it is and will always be solvent. At present, however, Ukraine is considered to be a risky country, and the export support has been stopped. But we cannot sign the orders without the support because Energoatom does not have the funds at the moment to pay us a billion of crowns at once. We should not regard Ukraine as a whole but concentrate on those subjects that are interesting for us from our business point of view and can bring work to our firms. For example, 250 people are employed on our orders in Ukraine. Everyone talks about how we should support Ukraine. In our case, the support concerns the Ukrainian nuclear power engineering operating 15 one-thousand-megawatt units, i.e. 7.5 times the Temelin NPP, which need maintenance. We are the only firm now able to provide the equipment and services. I heard that we would send bulletproof vests to Ukraine, but in winter the people will freeze to death in the vests without electricity.

Can you disclose any new orders your company managed to sign?

We have won a very important project worth one billion crowns in Hungary, which means that together with the other contracts we have contracted orders for 5 billion crowns for the years to come. In the period 2015-2019, we will modernize the control and security systems of the Paks Nuclear Power Plant. This year, we will work on project preparation, with the implementation phase to follow. The latter will take place in a similar manner like our great project for ČEZ in the Dukovany power plant, where we carry out turnkey reconstruction of control systems in all four power units. Another Czech firm ZAT works with us as our key partner both in Dukovany and in Paks. The project will be finished next year, i.e. 16 years after its start. The period is so long because the reconstruction takes place during the power plant operation without having to make additional shutdowns. Only always when refuelling, a part of the old system is removed to be replaced by a new one. In Paks, not the complete system but some parts of it will only be replaced. Put simply, the old control systems will be replaced by new digital ones. The volume of works for the Hungarian party will be lower than in complete replacement as we do it for ČEZ. But ČEZ invested the big money mainly to increase operation safety considerably. I think it was one of the preconditions for extending the lifetime of the Dukovany NPP subsequently.

In your opinion, what is the lifetime of the Dukovany NPP now after the ČEZ investments?

I don’t know what the decision of the State Office for Nuclear Safety will be but, personally, I am sure that Dukovany is now capable of completely safe operation for another 20 years.

Do you think that the contract between Hungary and Russia for completion of two power units in the Paks NPP could be reviewed?

We should follow from the fact that there is a valid contract between Rosatom and the Hungarian party. It seems to me that Hungary wants to pursue an independent line in power engineering. I think that it is the right of every country, and I understand it. The influence of the European Union in the power engineering sphere is not exactly positive. I only believe that the Czech Republic will find the power it needs to deal with some energy matters itself as a sovereign state.

How do you see the energy policy in the CR?

States should not yield to the victories of various political parties, especially the “green” ones. All the resources called “renewable” depend on whether the sun shines and the wind blows. If it does not, there is a problem. In my opinion, a suitable mix of electrical energy sources should be found where stable sources must prevail. The advantage of nuclear power units, in addition that they produce electricity irrespective of weather, is also in the fact that their production and power can be regulated. As for the nuclear power engineering, the global supplies of uranium provide so high energy capacities that not to utilize them would be highly unfortunate. The pressurized-water reactors constructed nowadays are at a high technical level and provide maximum operation safety.

How would you comment your cooperation with the owner of your firm, Russian company OMZ?

There appeared articles in the media stating that all the Russian capital is controlled in a wrong way in this country and that it will even become insolvent in the course of time. It is not the case; not all Russian owners treat their firms unkindly, and Škoda JS can serve as an example of this. OMZ supports our business, providing investments for enterprise development and never creating pressures in directions that would be disadvantageous to us. On the contrary, they help us actively in our contacts with Rosatom, for instance, in ensuring complementary production in petrochemistry and gas industry.

Which are the main areas you deliver to?

We work together with the leading players in nuclear power. Our business partners and projects we work together on are located in the Czech Republic, Slovakia, Hungary and Ukraine, as well as in Bulgaria, Russia, France, Finland, Germany, and USA, and we also strive to win an important contract in Great Britain. Also, I would like to point out that our projects bring work to the employees of our subcontractors. For example, in the project for completion of the third and fourth units of the Mochovce Nuclear Power Plant in Slovakia, we work together with other leading suppliers from the Czech Republic, such as Sigma, Vítkovice, Chemcomex, ZAT Příbram, and many others.

What parts take the individual activities in your economic result?

Our company is in business in three fields. The first one is investment engineering, in which we supply turnkey systems to nuclear power plants from project documentation to assembly and commissioning. An example is the key participation in the completion of the third and fourth power units in Mochovce, Slovakia, in the Temelin modernization project, and in control system replacement in Dukovany, Czech Republic, and in Paks, Hungary.

The second area is the deliveries of servicing activities to operated nuclear power plants. At present, our company provides turnkey services to ČEZ for all its six nuclear islands. The current effort is to extend the activities abroad, especially where the VVER type power units are operated.

The third area is production concentrated in two shops, namely the production of lightweight precision products relating to reactor regulation and control, and the heavy reactor hall where reactor internals are produced and assembled and spent nuclear fuel casks are produced. The company plans to develop this sphere intensively in the future.

Production takes up one third, service takes one fifth and engineering one half of the firm’s economic results. The number of company employees has stabilized on 1100, which makes us a key employer in the region with a highly qualified workforce.