EU to investigate Czech state support for two new nuclear units

BRUSSELS, Dec 22 (Reuters) - The European Commission said on Monday it has opened an investigation to assess whether public support that the Czech Republic plans to grant for the construction and operation of two new nuclear units is in line with EU State aid rules.

The Czech Republic's competition authority in April cleared the way for the signing of contracts with South Korea worth at least 400 billion Czech crowns ($19.30 billion) for the two units in Dukovany after it rejected appeals by EDF of France.

The Commission said in a statement that it had doubts on the appropriateness and proportionality of the Czech government's aid package. It said it also doubted the impact of the support on competition in the market and its compliance with other provisions of EU law.

The Czech Republic plans to provide a low-interest repayable state loan of an initial amount between 23 billion euros ($26.99 billion) and 30 billion euros, as well as a two-way contract for difference with a proposed duration of 40 years, according to the Commission.

A mechanism to protect the beneficiary of the support EDU II, which is 80% owned by the Czech government, in case of policy changes and adverse impacts, is also planned, the Commission said.

($1 = 20.7230 Czech crowns)

($1 = 0.8521 euros)

(Reporting by Louise Breusch Rasmussen, editing by Charlotte Van Campenhout)