Government to merge power companies before elections

07-05-2002

The Czech government has approved a merger of the Czech national power utility CEZ with eight regional power distribution companies in an effort to make CEZ more attractive for foreign investors and help the company survive tough competition on the European market. However, the opposition has severely criticised the decision, which they say is detrimental to Czech consumers.

The cabinet has decided to sell its stakes in eight regional power distribution companies to the dominant electricity producer, the power utility CEZ. In exchange, the state will obtain a controlling stake in CEPS, the company which owns the national power grid.

The decision has been criticised by economic analysts as well as the right-of-centre opposition parties. While experts warn that the move will reinforce the monopoly of CEZ on the Czech market and in effect damage consumers, politicians are unhappy about the government making such controversial and irreversible decisions just a few weeks before the elections.

The shadow trade minister Mirek Topolanke from the main opposition Civic Democratic Party considers the step as nonsensical:

"My personal hope is that someone will be sent to jail, because in my opinion, this is nothing else than a case of government-orchestrated asset-stripping."

The Czech government unsuccessfully tried to sell its majority stake in CEZ and the power distribution companies in the past months but the foreign bidders were not willing to pay the asking price or failed to meet some of the other strict conditions of the public tender.

Despite the negative effects of strengthening the monopoly of CEZ on the domestic market, some say the latest steps will help the company survive tough competition from European energy giants once the EU market is liberalised.

07-05-2002