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In Slovakia we learn how to dispose of nuclear power plants

Date: 4. 4. 2016

Russian company Rosatom starts to look for suppliers for the construction of Finnish nuclear power plant Hanhikivi. Czech companies have a good chance to participate in this project if they offer funding together with supplies. "Also due to the global situation around Russia, Rosatom says that if a supplier brings quality, technical guarantee and know-how together with funding, it has a good chance to win the tenders. We believe that this is the way to obtain contracts“, says Josef Perlík, the General Director of ŠKODA JS a.s, owned by Russian company OMZ since 2004.

-  In mid-March you extended the scope of your activities in the construction of the Mochovce nuclear power plant, by signing the contract for the expert support in completion of the non-nuclear part. Since when have you been specialized also in parts beyond the nuclear island?

For two years we have been acquiring knowledge of the non-nuclear part of power plants. That is why we have been looking for experts who would join our team. Nowadays, our company is well equipped even for the power plant´s secondary part.

- Is that only because of Mochovce, or for other contracts as well?

Primarily because of Mochovce, but we hope it could bring further business opportunities, of which we have already been negotiating. We are interested in Rosatom´s projects in Finland, Hungary, Turkey and possibly in Jordan, but that one is probably far in the future. All these power plants have a non-nuclear part (secondary island). If we extend the scope of our activities we will be at an advantage in possible contract negotiations.

- The most advanced of the above projects is probably the Hanhikivi nuclear power plant in Finland. How big is the chance that Rosatom will make you one of its suppliers?

Within a year we should find out whether we can become the part of its supply chain. At the beginning of February we have initiated basic negotiations with Rosatom, who has already opened the first tenders for suppliers. We have been identifying which ones are acceptable for us, and preparing the first bids.

- What areas could be interesting for you?

We are certainly interested in supplies of instrumentation and control systems or key components for nuclear island. On the other hand supplies of large units for nuclear islands are obviously out of question, because that is what Rosatom wants to keep within its responsibility. Maybe we could think about sub-supplies for the non-nuclear part.

- Why would Rosatom need large external suppliers, if it is able to produce an entire power plant by itself?

Rosatom is able to build a power plant by itself, but other factors must be taken into account. The funding, for example. Rosatom says, also due to the global situation around Russia, that if a supplier brings quality, technical guarantee, know-how and funding, it has a good chance to win the tenders. We believe that this is the way to obtain contracts.

- So the funding will be a part of your bids?

Absolutely. Negotiations are in progress with the Czech Export Bank and EGAP. People from EGAP have already held high-level meetings with Rosatom. It can be a good opportunity not only for us, but also for the entire Czech industry. If the CEB, EGAP and commercial banks support the involvement of Czech companies, our chance to obtain contracts would be high. This was confirmed by Rosatom itself, during last year's negotiations with representants of Czech companies.

- Would it be possible to use a similar model at Hungarian Paks, where a construction of two new units is planned?

Yes, but there we need to be patient. There are still some problems resulting from the way how Hungary conceived and signed the entire project. The European Commission does not like it. I believe the project will set in motion again. The truth is that the Hungarians went their separate ways, on the other hand some ideas of the European Commission of how to proceed in such tenders are not quite optimal. The Hungarian way is clearly correct, it is necessary to support it.

- You have previously identified Ukraine as another potential market, but now you are accused of corruption there. How did this accusation affect your activities on the Ukrainian market?

It is called an affair, but no corruption has occurred. All people involved in this case begin to understand it and we do not feel any significant impact on our business.

- So it did not affect your cooperation with Energoatom, the operator of Ukrainian power plants?

Not at all, because Energoatom also knows that this is just a factitious case. They know what contracts we have signed, what is their subject. So they still approach us as a reliable company.

- Are there any new contracts outlined in Ukraine?

We are negotiating supplies of key equipment, particularly drive mechanisms for reactors and compact racks, which are components of the nuclear island. We are talking about supplies for the Chernobyl nuclear power plant, which is now being modernized to ensure the plant´s safety after the accident. We are also negotiating the supply of casks for spent fuel transport.

- What could you do at Chernobyl?

There must be built a new sarcophagus which shall secure the damaged part of the plant. Within this project it is possible to deliver a wide range of mechanical structures and handling equipment, for production of which our plants are ideal.

- Do you feel any impacts of the Russian-Ukraine crisis?

Not much. They perceive us as a Czech company, although we have Russian owners. The only problem associated therewith is the geopolitical perception of the situation, which causes problems with export financing to Ukraine. We are sorry that the fact, that our customer is one of the few companies that is working normally, is ignored. They do not owe us a single euro.

- You are a major supplier of service and maintenance works for Czech nuclear power plants. After the problems with welds, ČEZ announced that it would change the way of implementation of such works. Have you received from ČEZ any requirements on what to change at your company and at your suppliers? 

In cooperation with CEZ We have responded with certain operational interventions in the organization of work of the service activities to be performed by the end of 2016, for which we have a signed contract. We expect more detailed and significant instructions before the tender for service activities in 2017. The tender has already been opened and we are the only qualified supplier. In the tender documentation we will see how much ČEZ wants to change the delivery model and the principle of work.

- What changes have you made for 2016?

Especially the communication with ČEZ. We have also accepted the fact that some activities of the Tediko company, that carried out the weld X-rays, passed directly under ČEZ. We have been supporting actively the elimination of the negative impacts on the customer. At the moment there is nothing more fundamental that could be done.

- You have previously argued that when you had hired Tediko, it had all the necessary certifications and it was not possible to reveal their bad work. Have you already learned a lesson?

We did not hire Tediko, we only took it over as a company that had long figured in the supply model. The checks were intense and complied with all the parameters of how such checks should look like. But such inspections at the level of audit can hardly detect some intentional behavior. Now, of course, we go into greater depth during checks of our suppliers.

- Germany is going to shut nuclear power plant down. Are you preparing to enter the field of decommissioning and disposal of old power plants?

Decommissioning and disposal of power plants is one of the market opportunities that we are focusing on. We are beginning with the Slovak Republic, where there are many tenders going on in Jaslovské Bohunice. We sign up for these tenders regularly, although we have not yet succeeded. But the tender, which for us is the key one - the disassembly of the primary circuit - is still ahead of us. So we learn on the fly.

- When would it be announced?

It could be this year.

- Are you interested in Germany?

We are very interested in Germany, but when entering such a market, you need a reference or a strategic partner who will give you one. By now we do not have any reference in the field of decommissioning. But I hope we could get one in Slovakia, which would correspond also in the time point of view.

- In such case there could be a lot of work in Germany.

It could. But it is a country that can keep this work for its own companies. Obviously, Germany will not have all the resources needed for the disposal of the power plants. The question is whether Germany shall cover all the works by extending the schedule of the works. For example a German company EWN, that also signs up for the Slovak tenders, is a strong player. It is one of the best companies in the industry. Additionally, decommissioning is not technically so difficult, therefore other companies can quickly get the necessary know-how and apply for tenders. So I expect a great competition from German companies.

- How did ŠKODA JS do economically in the last year?

The final financial audit is still ahead of us. But I can say that we confirmed the upward trend of the past two years. Revenues, profit and volume of newly received orders grew. I believe that the growing trend will continue this year.