The Czech government can lend majority state-owned utility CEZ money for a planned multi-billion dollar expansion at its Dukovany nuclear power plant, government and company officials said on Thursday.

The Czech state has long been in talks with CEZ, in which it owns a 70% stake, about expanding its nuclear power fleet to replace blocks set to expire in coming decades, as well as lignite power plants to be retired in the 2030s.

But costs and financing have been sticking points.

On Thursday, state and company officials agreed a state loan for the construction of a new block, estimated to cost 160 billion crowns (5.31 billion pounds), was possible, pending European Commission approval.

The two sides also agreed details of a plan under which the state could buy electricity from CEZ and take the power price risk off the company.

Prime Minister Andrej Babis said the price was estimated at 50-60 euros per megawatt hour (MWh), above market prices today.

"We have more or less agreed that the state will give CEZ a loan with very good conditions both for the state and for CEZ, and the electricity price is based on the financing costs," Babis said.

CEZ Chief Executive Daniel Benes said a possible loan could cover 70% of costs.

CEZ and the government are aiming to sign by July two of three agreements that are part of a framework deal for a new block to come online in 2036.

Havlicek told daily Hospodarske Noviny in an interview published on Thursday that using the state to borrow, instead of CEZ, would cut costs.

Critics, including some CEZ minority shareholders, argue construction costs will run much higher than planned.

The Czech Republic has been pushing for nuclear energy to be seen as a green or low-emission source under European Union rules, which Havlicek has said would also help reduce funding costs.

(Reporting by Jason Hovet and Robert Muller; Editing by Christopher Cushing)