Bosnia-Herzegovina has chosen the Czech power utility CEZ as a joint-venture partner for investing in two of power plants, and developing coal mines in the Balkan country. If the deal is finalised, it would be among the largest-ever foreign ventures for CEZ; the state-owned utility is reportedly ready to invest 1.8 billion dollars in the venture.
In another potentially huge foreign investment, the Czech engineering company Skoda Export is to due sign a memorandum of with a state of India in February towards developing a multi-billion dollar port complex. The deal with the southern state of Andrha Pradesh was announced during Czech Prime Minister Jiri Paroubek's three-day official visit to India. Paroubek has said bilateral trade with India could reach 1 billion dollars annually, twice the current level, in a few years time.
Bankers estimate that mortgage borrowing reached a record 2.8 billion dollars last year, bringing the total of outstanding loans in the sector to nearly 7.3 billion dollars. The business daily Hospodarske noviny reported that mortgage borrowing now represents about half of all consumer bank debt. The bank Ceska sporitelna saw a 22 percent increase in the value of mortgage contracts over 2004, and expects a further increase of 30 to 35 percent this year.
In related news, the Cabinet this week approved a proposal for subsidising loans for young families looking to renovate their flats. An exemption for new housing construction on value-added tax, or VAT, is set to expire in 2008, and so buying new homes will soon become more expensive.
Meanwhile, the government has yet to take a position how to spend the remaining 80 million dollars in the National Property Fund (FNM) accounts. The FNM, as it is known in Czech, handled the privatisation of state-owned property. One proposal, which observers say has a good chance of passing, is to use the money to build retirement homes for the elderly.
The Transport Minister, Milan Simonovsky, has said the Czech Republic will seek compensation from the Italian company Alstom, the maker of the Pendolino high-speed trains, for losses due to the delivery of faulty trains. Of the five trains that were running, four had to be taken out of service. The Italian company has promised to fix the trains by February, when they should resume operation between Prague and the regional capitals of Ostrava and Brno.
And finally, the state-owned insurance company VZP - now under forced administration - has begun sending hospitals and other medical facilities overdue payments worth some 230 million dollars. The troubled insurer had, on average, been close to two months late in paying reimbursements. The Health Ministry said payment should reduce the lag time by over two weeks. Parliament voted this week to oust the head of the VZP and he main doctors' union (LOK) had been planning a strike to protest the late payments.