CEZ may sell power plants to satisfy EC

CEZ, the Czech Republic’s largest utility by market capitalisation, would be prepared to sell at least one of its generating plants as a way of ending a long-running anti-competition probe by the European Commission.
Commission investigators raided the utility’s offices in 2009 on suspicions that it may have acted illegally to push up power prices and exclude rivals from the wholesale electricity market. CEZ has denied any wrongdoing.
Selling some power stations would reduce CEZ’s control of the Czech market and could end the threat of having severe fines – up to 10 per cent of its 2008 global turnover, which was $5.2bn – imposed by Brussels.
“From the Commission’s viewpoint, the settlement will sufficiently increase competition in the market, thus rendering any further investigation unnecessary,” CEZ said.
The company, 70 per cent owned by the state, mentioned four coal-fired plants, each with a generating capacity of 800MW, and one, Počerady, with a 1,000MW capacity, as potential sales targets that would “put a quick end to the investigation”.
CEZ earlier estimated that the sale of two of its plants would fetch from $440m to $860m.
“At first sight these commitments appear to be capable of addressing these concerns, but the procedural steps of the investigation will continue,” said a Commission spokesman, adding that CEZ’s commitments would first be market tested before becoming legally binding.
Most of the plants being put up for sale have only had minimal modernisation conducted to meet tougher EU emissions standards.
One of the likeliest bidders for CEZ’s assets would be Czech Coal, the supplier of much of the coal used by CEZ’s generating plants. Czech Coal is also a rival keen to secure a bigger share of the Czech electricity market, and had complained to Brussels that CEZ was shutting it out.
The two companies have been negotiating a long-term coal supply agreement but have been stymied by their fight over the power market.
The other potential buyer is EPH, a Czech industrial holding that has undertaken previous power generating deals with CEZ.
Bram Buring, an analyst with Wood & Co, a central European investment bank, said that the market had priced in the asset sale, as it has been a subject of discussion for several months.
However, ending the investigation by EU regulators could free up CEZ to expand in areas such as heating plants without falling foul of Czech competition authorities.
CEZ shares rose 1 per cent to close at Kc739.30 on the Prague Stock Exchange.

Financial Times, 26.06.2012