Homepage News ŠKODA JS a.s. - we modernize security systems in nuclear power plants

ŠKODA JS a.s. - we modernize security systems in nuclear power plants

Date: 18. 8. 2015

Source: Svět průmyslu

ŠKODA JS a.s., having its seat in Pilsen, the Czech Republic, is a firm with almost 60 years of tradition in nuclear power engineering. The core activities are investment engineering, production of nuclear facilities, and services for nuclear power plants. In the last two years, we are engaged in expanding our activities into the refinery, petrochemical and gas industries, Ing. Miloslav Provod, Member of the Board and Commercial Manager of Škoda JS, told Svět Průmyslu. The company employs about 1100 people. OMZ B.V. is the majority owner of the company.

Could you characterize briefly the main activities?

Investment engineering represents the management of large investment nuclear projects, starting with elaboration of basic and detail designs and ending with work implementation and handover to the customer. We are engaged in implementing both new projects and those dealing with modernization and reconstruction of already operated power plants.

Production of nuclear facilities covers products such as reactor components, spent fuel storage facilities, containers, control rod drive mechanisms, and parts of power plant primary circuit components.

Service for nuclear power plants offers comprehensive advanced solutions for highly effective operation of nuclear power units during the whole lifetime period, unique know-how in repairs, and operative service in repairs, maintenance and modernization of nuclear power plants.

What are their shares in the revenue?

Our annual revenues ranged between 3 and 5 billion crowns in the last years. The fluctuation depends on whether we finish or start new projects, especially in engineering, because these bring the highest revenues, today approximately 50 per cent. Production of nuclear facilities and NPP service account for approximately 30 and 20 per cent respectively.

Can you introduce the recent key job orders?

High volumes we reach in investment engineering. The greatest project based on a contract from 2009 is the completion of Units 3 and 4 of the Mochovce Nuclear Power Plant in Slovakia, where we are the contractor for a part of the nuclear island. We also assist Slovenské elektrárne to coordinate the completion project.

In Service, it is clearly the complete maintenance of the nuclear island in all 6 units of the Dukovany and Temelín Nuclear Power Plants. Production is greatly dependent on the situation currently present in the nuclear market. Modernization and repairs are the works demanded most these days. Therefore, the production of components to replace power plant equipment at the end of its lifetime is crucial for our company, with ČEZ being our greatest customer in container deliveries.

But certainly the project you have won in Hungary is far from being negligible too.

That falls within the engineering area. The project worth approximately one billion crowns deals with modernization of a part of control security systems in all four power units of the Paks Nuclear Power Plant in the period 2015-2020.

We are implementing a similar project, even greater, in the Dukovany Nuclear Power Plant. It will be finished in 2016 and concerns the complete reconstruction of the instrumentation and control system.

Would you compare the economic aspects in the years 2013 and 2014?

Let me start in a greater detail. At present, firms are mostly assessed simply by their annual turnovers, and the best situation is when the turnover grows gradually year by year. But we are not a firm with series production, which would have a certain level of production ensured and would only try to convince still more customers to buy its products. Our firm works with projects that start at a certain moment, reach their peak, and them come to a finish.

For example, when we won one of the extensive job orders, the 2009 project in the Mochovce Nuclear Power Plant worth almost 10 billion crowns, our revenues grew continually owing to it up to the peak in the years 2011–2012 when we reached yearly revenues around five billion. In 2013, however, due to finishing some great projects, we came to a post-conjuncture stage. A similar situation is in the modernization project of the Dukovany Nuclear Power Plant, where we have come to a final phase. All this has a great impact on our revenue volumes or their year-to-year decrease. We were not able to find an adequate substitute for the above-mentioned projects then. It is not easy to raise 5 to 10 job orders to cover one and a half billion a year, simply because there are none in the market. The year 2014, therefore, will be worse than 2013 in terms of revenues, as we expect to make some three billion crowns, but we are still in the black. Naturally, the management has always tried and tries to prepare for such situations well in advance. We expect the revenues to start growing again in 2015.

How much did the cancellation of the tender for the completion of two units in the Temelín Nuclear Power Plant affect you economically?

The tender for completion of Units 3 and 4 in the Temelín Nuclear Power Plant was running for four years including qualification. We devoted a considerable part of the firm’s engineering capacities to win the project, so we lacked strength that could be used in other projects. The stoppage of the tender in 2014 not only disappointed us but also caused losses through the expenses we had to spend. Now I can say that: the total costs, or more specifically losses, reached approximately 250 million crowns.

But there were more negative events. What about Ukraine?

The situation in nuclear power engineering is difficult. The tragic event in Chernobyl in 1986 was a very serious moment that stopped projects more or less all over the world. After it, nuclear power has never resumed the position it had before. And when it already seemed to be on the rise, the Fukushima accident came in 2011, again returning the development a couple of steps back. Hesitating countries that were not yet decided whether to incline to nuclear power, abandoned it perhaps once and for all.

The current events in Ukraine bring about negative effects. Ukrainians get into problems with financing. Firstly: they lose the amount of free money they could use for nuclear power plants, because, in context with the situation there, the state has to address more acute problems. Secondly: the Czech Export Bank, which helps us finance our export activities significantly, evaluated Ukraine as a problematic region and stopped providing loans. The support was ended in November 2014. Since then, we have been trying to resolve the issue with the Ukrainian party as to how to finance the already delivered, developed and/or other projects. The Ukrainian government considers the job orders from a financial point of view. We lead discussions with the Export Bank, trying to assess Ukraine not only globally but also in a differentiated manner, taking customers into account. NAEK Energoatom, operator of the nuclear power plants, has been our business partner for years and has always been reliable in meeting its obligations.

I can see the field of your business is quite complicated. It seems to me that one has literally to fight for survival there. What strategy will the firm choose?

I wouldn’t call it so dramatic but, given the market situation, we think about how to proceed and how to keep our potential up to standard. We have set up a firm development strategy until 2020, founding it on the following three pillars:

In investment engineering, we have the opportunity to expand our activities in the Mochovce Nuclear Power Plant. Given the state of affairs there in construction control, we were asked to join the project management. At the end of the last year, we signed a Memorandum of Understanding under which Škoda is to accept the role of a general coordinator of the power plant. At present, the project is in the development stage. We also consider other nuclear projects that mainly concern decommissioning; now we can see our potential in the Bohunice Nuclear Power Plant where they are just going through such a process.

In the production area, we will focus especially on spent fuel storage. We supply containers to the Dukovany NPP under a licence granted by GNS. We won a tender for delivery to the Temelín NPP with a container of our own design and expect signing a contract soon. We also monitor the worldwide opportunities to deliver our containers. By winning other job orders, we would create a basis for our heavy production, which we see to be the most critical one in terms of job orders, but viable if based on appropriate products.

In service, we mainly want to keep the potential, which means to remain the leading supplier to ČEZ, at least in the nuclear power plant primary circuits. In the long term, we also work to expand our activities towards Slovakia, using the synergies with the Czech Republic.

To sum up: we hope that we will get a chance by the year 2020 to take a considerable part in an investment project of construction of a nuclear source, perhaps even in the CR. We would like to be part of it.