TED Case Studies

Temelin Nuclear Power Plant

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          CASE NUMBER:         223   
          CASE NAME:          Czech Temelin Nuclear Power Plant


1.        The Issue

     Two Soviet designed nuclear reactors in Temelin, in the Czech
Republic are to be completed and renovated by I & C Energo, a joint
venture consisting of Westinghouse Electrical Co. of Pittsburgh,
Ceske Energeticke Zavody (CEZ), the Czech state utility, and CME,
a private Czech concern.  The funding for the Temelin project will
be guaranteed by a loan of $317 million by the U.S. Export Import
Bank (ExIm).  The project has not only been approved by the ExIm,
but has been endorsed by the National Security Council, the U.S.
Regulatory Commission and the Clinton Administration.  The Temelin
reactors would generate 2000 Megawatts of electricity, of which a
quarter would be available for export to Western Europe. 

2.        Description

     The opponents to the power stations are numerous and include
individuals and groups from the Czech Republic, the U.S. and
Austria, and the Austrian government.  Although the deal includes
the incorporation of Western nuclear safety measures, opponents are
skeptical of any nuclear power plants primarily based on Soviet
technology.  The U.S. Congress, which is to have final say on the
ExIm Loan on March 3, 1994 has raised questions concerning
environmental impact assessments and liability in the event of an
accident.  However, the opportunities in Eastern Europe for an
industry increasingly unpopular in the U.S. and Western Europe, the
need for an alternative to polluting coal burning plants in the
Czech Republic and the support from the Czech and U.S. government
all contribute to the likelihood of a positive response for the

     Because of mainly financial problems, construction of the two
VVER 230 Soviet type reactors which were eighty and sixty percent
completed (according to Greenpeace) ceased in 1989.  In light of
heavy pollution by coal-fired plants and the need for income the
Czech Republic has encouraged the CEZ, which is being privatized,
to finish the reactors (see BALTIC and KRAKOW cases).  The project
has cost $900 million so far and will, on completion, be worth $2.7
billion.  In search of capital to clean coal-fired power stations
and complete Temelin, the CEZ must export energy.  In 1993, CEZ
exported three percent of its total electricity to primarily
Switzerland and Italy and earned $2 billion.  Nuclear power,
according to the CEZ, will be better for the environment, and is
more cost-effective than burning lignite.  CEZ intends to
eventually close coal-fired plants on completion of the Temelin
reactors.  In addition, because of Temelin's proximity to Western
Europe, export of electricity will be more feasible.

     Westinghouse Co., the world's largest supplier of nuclear fuel
and services, has won two contracts with Czech energy concerns
worth $350 million to supply U.S. manufactured technology and
equipment and services.  The Westinghouse deal is a positive sign
for the American nuclear industry which has not had orders for new
plants since the 1980s, as well as for the world's nuclear
industry.  With eighty nuclear power plants in Eastern Europe and
the former Soviet Union in need of renovation and improvement of
safety, the competition will be fierce.  Other participants in the
project include Citibank, which will grant the loan.  Financing
will also come from Belgian export credits provided by European
banks.  The Czech government will also guarantee the loans.

     The Temelin project has aroused concern primarily because it
will be an untried combination of old Soviet technology and new
Western technology and because of its proximity to other countries. 
Situated only 100 km from the Austrian border, nuclear fallout
stemming from the Temelin reactors would have devastating
transboundary effects.  The 1986 Chernobyl accident and its far-
reaching consequences, the fact that no evacuation plans for
Temelin exist and the fact that the reactors lie on the edge of an
active seismic zone have fueled the growing opposition (see
CHERNOBL case).  The Austrian government, along with the Austrian
based environmental group, Global 2000 and Greenpeace actively
lobbied the U.S. congress, the Nuclear Energy Commission and Vice
President Gore to block the ExIm loan.

     The opposition argues that the norms in the Czech Republic are
not the same as in the West and that energy saving measures would
be safer and cheaper than completing Temelin.  A study conducted by
a Belgian consulting firm found that Temelin, which will produce
2,000 Megawatts of electricity is the cheapest method for producing
electricity but that energy efficiency could save 3,500 Megawatts
of electricity.  The decision to build Temelin was made despite
a significant decline in demand for power in recent years.  In
addition, a World Bank report found that between 1995 and 2010
there will be no increased demand for electricity throughout
Europe.  Nonetheless, the nuclear industry expects demand to grow
by two percent annually from 1995 on.

     Austria has attempted to persuade the U.S. of Temelin's
deficiencies after the Czech Republic consistently resisted
discussions on developing alternatives to Temelin.  Austria has
offered aid to the Czech Republic in the form of cooperation in
energy efficiency and in construction of combined gas and steam
power plants.  The Czech Republic refuses to reconsider its plans
for Temelin and has made clear that Austria is infringing on its
sovereignty by attempting to prevent the completion of Temelin. 
Austria maintains that sovereignty is irrevelant in the event of a
nuclear accident.  Czech relations with the World Bank are also
strained.  The World Bank refused to assist the Czech Republic in
Temelin unless it was changed to a gas power station but did
negotiate a deal (Energy II) for a loan to improve Czech coal-fired
plants.  However, the World Bank has stopped the loan because the
money necessary for a state guarantee has been swallowed by the
guarantee for the Temelin project.  

     The question of liability has added to the complexity of the
Temelin issue.  The Czech Republic, as well as Austria, are not
signatories of the Vienna Convention on civil liability for nuclear
damage.  The convention holds operators of plants responsible for
accidents and charges them with financial security to cover costs
brought on by accident, mainly in the form of insurance.  The
legislation is necessary to ensure that operators are insured or
financially secured against accidents.  A requirement for the
ExIm loan is that the Czech Republic joins the Vienna Convention. 
Since Austria is not backed by the Convention it could only attempt
to extract reparations by bilateral negotiations with the Czech

     With the approval of the ExIm loan by Congress, their is
nothing to stand in the way of the completion of Temelin on this
side of the Atlantic.  However, the guarantee on finishing Temelin
has not been signed between CEZ and Westinghouse.  Meanwhile,
developments in the Czech Republic could threaten the impending
contract.  The recently created State Office for Atomic Safety is
not ruling out a new round of talks on the construction and
authorization of Temelin because it does not anticipate receiving
necessary documents on a new security system on time.  Moreover,
the Czech Green Party, supported by Austrian and German Greens have
launched a campaign to seek new Czech legislation concerning
nuclear power and an environmental impact assessment.  Mayors of
local communities and the Environmental Ministry may support this

3.        Related Cases

     MOCHO case
     CHERNOB case
     JAPANSEA case
     JAPANSPL case
     ARCTIC1 case
     KOMOSOL case

     Keyword Clusters

     (1): Trade Product                 =  Utilities [UTIL]
     (2): Bio-geography                 =  Temperate [TEMP]
     (3): Environmental Problem         =  Pollution [POLA]

     There is also the Bhaaten Power Plant and Westinghouse in the
Philippines and Electricite de France and Slovensky Energeticky
Podnik at the Mochovce reactors in Slovakia (see MOCHO case).

4.        Draft Author:  Mary-Ellen Foley

B.        Legal Clusters

5.        Discourse and Status:   DISagreement and INPROGress

6.        Forum and Scope:   CZECH Republic and UNIlateral

7.        Decision Breadth:   3

8.        Legal Standing:   TREATY

     The treaties are the Vienna Convention on Civic Responsibility
for Nuclear Accidents and the Paris Convention on Third Party
Liability in the Field of Nuclear Energy.  Various citizen groups
filed a $43.5 billion lawsuit against Westinghouse to "scare it"
out of its deal with CEZ.  The total amount of lawsuits from NGOs,
citizen groups and the Austrian government (federal and state
level) exceeds $280 billion.

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a.   Geographic Domain   :  EUROPE
     b.   Geographic Site     :  Eastern Europe  [EEUR]
     c.   Geographic Impact   :  The CZECH Republic

10.       Sub-National Factors:   NO

     Whether the CEZ receives funding (and Westinghouse,
indirectly) ultimately rests with the U.S. Congress.  Without a
loan, the CEZ will not be able to contract Westinghouse and the
completion of the reactors will be delayed (until a new financier
is found).  Whether Westinghouse is responsible for compensation
for "expected damages" will be determined by Austrian law which can
hold foreign firms liable for any damages by their activity.

11.       Type of Habitat:  TEMPerate

D.        TRADE Clusters

12.       Type of Measure:   Regulatory Ban [REGBAN]

     The Austrian government has filed a claim of $36 billion
against Westinghouse.  There have been no direct trade nor
regulatory measures except for the ExIm requirement that the Czech
Republic enter the Vienna Convention on Civil Liability.

13.       Direct vs. Indirect Impacts:   INDirect

     The Austrian claim against Westinghouse, if successful, would
indirectly affect trade.  The claim is legally based on
environmental reasons (the damages incurred from reactors). 
However, some have pointed out that Austria would not have acted
against Temelin if Siemens had been contracted by CEZ. 

14.       Relation of Measure to Environmental Impact

     a.   Directly Related    :    YES  POWER
     b.   Indirectly Related  :    NO
     c.   Not Related:        :    NO
     d.   Process Related     :    YES  UTILity

     Electricity will be the end product.  Austria's measures are
aimed directly at the producer.  There has been no mention if
Austria will ban imports of electric power in the future.

15.       Trade Product Identification: UTILity

     Westinghouse will supply Temelin with nuclear fuel,
instrumentation and control systems.   Electric power will be
available for export in 1996, providing domestic energy needs are
met first.  The Czech Republic is expected to increase energy
consumption by 12 percent during the next twenty years.  Nuclear
energy is considered essential because coal reserves are dwindling
and burning the coal is causing severe environmental damage, such
as acid rain.  Moreover, oil imports at world market prices are
difficult because of the shortage of hard currency.

16.       Economic Data

      In 1993, CEZ exported $2 billion worth of electricity.

17.       Impact of Measure on Trade Competitiveness:  MEDium

18.       Industry Sector:    UTIlity

19.       Exporter and Importer:   CZECH Republic and EURCOM

     Westinghouse  $220 million CEZ Czech Republic $317 million 
Importers of Czech power include Italy and Switzerland.  Through
the business venture with Westinghouse, the Czech Republic serves
as the importer of U.S. goods and services.

E.        ENVIRONMENT Clusters

20.       Environmental Problem Type:  RADIOactive

       A nuclear accident would contaminate land, air and bodies of
water.  Radioactive wastes, or spent fuel from the reactors will
affect land and possibly water.

21.       Name, Type, and Diversity of Species

     Name:          MANY
     Type:          MANY
     Diversity:     MANY

22.       Resource Impact and Effect:   HIGH and PRODuct

23.       Urgency and Lifetime:    MEDium and 100s of years

     The problem of the Temelin reactor in relation to the
environment is not too urgent since the plant is not running.  Upon
start-up, "urgency" would only be manifested through an accident (a
leak or explosion, for example).  However, as feasible sites become
rare, storage of spent fuel will be a serious problem. 

24.       Substitutes:   SYNTHetic and CONSV

F.        OTHER Factors

25.       Culture:  NO

26.       Trans-Border:  NO

     Nuclear fall-out has no geographical limits -- all European
nations would be affected to some degree in the event of a nuclear

27.       Rights:   YES

     Environmentalists believe that the decision to build Temelin
is at variance with the Charter of Fundamental Rights and Freedoms
because information released on the reactor has been biased. 
There has been no public participation in the decision-making
process, no vote in Parliament and no environmental impact
assessment.  They maintain that the Czech Constitution, which holds
that state bodies are to work in the citizen's interest, is being
violated.  Fifty-four out of 60 of the towns surrounding Temelin
have asked the government not to build the plant.  There is,
however, expected to be a national referendum on whether the
Temelin plant should be completed.    
       Furthermore, the rights of concerned citizens in countries
surrounding the Czech Republic are also being ignored.  Because of
"sovereign rights" of states, individuals have no say concerning
life threatening risks caused by neighboring countries.

28.       Relevant Literature

Baxter, Andrew.  "Westinghouse in Czech Nuclear Deal."  The
      Financial Times.  May 19, 1993, 8.
Bollag, Burton.  "Westinghouse Expects Czech Nuclear Deal." The
      New York Times.  6 April 1993, Sec. D, 4.
CTK National News Wire.  "Constitutional Court Receives Compliant
      Against Temelin."  25 February 1994.  In Lexis Nexis.
      . "Czechs Selling Electricity to Pay for
      Temelin."  17 February 1994.  In Lexis Nexis.
      .  "Government Accedes to Stipulations on Nuclear
      Responsibility."  17 August 1993.  In Lexis Nexis.
      .  "Greens Attack Austrian Government over Temelin."  1
      February 1994.  In Lexis Nexis.
      .  "Reconsideration of Temelin not Ruled Out."  13 April
      1994.  In Lexis Nexis.
      .  "Revealed Study Increases Austria's Temelin Chances."
      18 February 1994.  In Lexis Nexis.
      .  "Temelin was Subject of Congress Hearing."  25 February
      1994.  In Lexis Nexis.
Greenpeace.  Background Brief:  US Tax Dollars Create Nuclear
      Hazard in Eastern Europe.  Washington D.C.:  Greenpeace,
      February 1994.
Hudik, Bernhard.  "Greens Oppose Czech Nuclear Power Plant."
      Propriety to the United Press.  14 April 1994.
International Atomic Energy Agency.  International Conventions on
      Civil Liability for Nuclear Damage. IAEA: Vienna, 1966.
Leslie, John.  "Survey of World Nuclear Industry."  The Financial
      Times.  17 November 1993.
Lippman, Thomas.  "U.S. Nuclear Loan Deal Draws Austrian
      Protest." The Washington Post. 23 February 1994, Sec. A,
Lohmeyer, Michael.  "Tschechische Republik:  Verhindert Das 
      Parlament in Prag den Weiterbau von Temelin," Die Presse.  
      5 February 1994.  Reuter Textline in Lexis Nexis.
The New York Times.  "Company News."  3 July 1993, Sec. A, 35.
Ratnasabapathy, Senthil.  "Environment:  Activists Fight U.S.
      Plans for Czech Nuclear Plant."  Inter Press Service.  4
      February 1994.  In Lexis Nexis.
      .  "Environment:  Austria Seeks Nuclear Damages from U.S.
      Firms."  Inter Press Service.  6 October 1993.  In Lexis 
Reuter European Business Report.  "Czech Government Accused of
      Cover-Up Over Temelin."  Reuters Limited.  16 February
      1994.  In Lexis Nexis.
Die Presse.  "Nur Geringe Chancen."  29 January 1994.  In Lexis
The Wall Street Journal.  "Westinghouse Electric Corporation." 
      18 May 1993, Sec. B, 9.


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