The Government of the Czech Republic has signed agreements with state-controlled utility company CEZ for the expansion of the Dukovany nuclear power plant.

Reuters reported that the agreement includes a general framework as well as details of the expansion’s initial phase.

It will also include a tender in which CEZ will outline a preferred list of its suppliers by 2022. It would then finalise the contract with a supplier by 2024. CEZ has planned to launch the supplier tender by the end of 2020.

It is estimated that the construction of the new unit would cost $7.04bn (€6bn).

The nuclear power plant expansion would require approval from the European Commission to ensure the project meets EU state aid rules.

The Czech Republic has backed nuclear power projects despite many EU countries, including its neighbour Germany, gradually shifting towards renewable energy projects.

Czechia has justified its decision by arguing that nuclear is a carbon-free alternative option.

Earlier this month, the country reportedly agreed to offer an interest-free loan to state-controlled utility company CEZ, to help with construction costs of a nuclear power station.

CEZ will use the loan to construct a nuclear power unit with approximately 1.2GW capacity at the existing Dukovany nuclear plant. The loan would cover 70% of the estimated project cost of around $6.9bn (€6bn), according to a government document seen by the news agency.

Initially, the loan would be interest-free, but the government would charge 2% interest once the power plant begins its operations. Additionally, the government has agreed to purchase power from the nuclear unit, giving CEZ security.