PRAGUE (Reuters) - The Czech Republic will have to build new nuclear power plants to replace ageing coal and nuclear capacity even if they are in breach of European law, Prime Minister Andrej Babis said on Wednesday.
The government wants CEZ to lead the nuclear projects but the 70% state-owned electricity producer has demanded state guarantees the plants would be both viable and deliver returns to shareholders.
The EU nation generates more than a third of its electricity from nuclear energy and Babis has advocated nuclear power as a low-carbon alternative to coal, which now produces about 50 percent of power.
"We have to push it through, even if we were to breach European law," Babis told the European committee of the lower house of parliament.
"Energy security is our priority and there is no way around it."
Potential state guarantees are now under negotiation between CEZ and the government, which has not fully backed any proposed plan beyond saying it would cover the risks of regulatory and legal changes that might complicate construction and operations.
European Union regulators would have to clear any state aid for the projects.
The European Commission has approved aid for two recent projects - at Hinkley Point in Britain and at Hungary's Paks - despite protests from nuclear power foe and Czech neighbour Austria.
The government's preferred option is for CEZ to first build one reactor at the existing Dukovany nuclear plant to replace reactors due to be shut down after 2035. A second reactor at the other Czech nuclear plant, Temelin, could follow.
CEZ had cancelled a previous tender to build a new unit at the existing Temelin plant in 2014 after the previous government refused to provide state guarantees.
No decision on a supplier is expected until after the next election in 2021.
Six firms have shown interest in building the next unit - Korea's KHNP, Russia's Rosatom, France's EdF, Westinghouse of the United States, the Atmea consortium of Mitsubishi Heavy Industries and EdF, which has been taken over by EdF, and China's CGN.
CEZ has said it plans to phase out its coal-fired power plants by 2040 when only its newest lignite power station would remain operational.
(Reporting by Jan Lopatka, Editing by Michael Kahn and Nick Macfie)