Government cancels power sector privatisation

10-01-2002

CEZ logoCEZ logo "Given the extremely strict non-financial conditions, like the obligatory purchases of domestic coal, the required price was very unrealistic."

What do you think would be OK, what would be the realistic price?

"Given the non-financial conditions, I think the cabinet could expect something between 110 and 140 billion Czech crowns."

The Czech government decided to sell CEZ only together with its six regional distributors. Wouldn't it be more advantageous and also more likely for the government to sell CEZ separately and then the regional distributors separately?

"Obviously there were bidders for such a big asset as CEZ and distributors together, so I don't think this was the main problem."

The Finance Ministry is to produce a new plan for privatisation by the end of February this year. But is it necessary to privatise CEZ at all because CEZ is a dominant power utility in the Czech Republic and will remain so even if it is a private company? And if we look at the electricity prices, do you think that the electricity would be cheaper for customers when CEZ is a private company?

"It will not make a difference within several months or one year, but in terms of years it will make a difference whether CEZ will be owned by a private company which is focused on the profit maximization including cost reduction and efficiency gains and stuff like that, which has an implication for the electricity prices as well."

Do you think the Czech government should try to privatise CEZ and the distribution companies as quickly as possible or what is now the best way for the Czech government to do?

"This is a tricky question. There is definitely not a need for as fast a privatisation as possible. On the other hand I don't think that if the new tender is held, say, in one year the bids will be different from the bids we saw now, I mean in terms of privatisation price and offered non-financial conditions, I think that the bids are very likely to be more or less the same."

That was RP's Lucie Mouckova talking there to Jiri Soustruznik from Patria Finance.

10-01-2002