Czech government agrees power asset swap

    7 May 2002 – The Czech government Monday approved the sale of majority interests in eight regional power distributors to dominant utility CEZ which, in turn, sold a 66 per cent stake in the national grid operator to the government, according to a report from the news agency CTK.

    CEZ is reported to have paid the state about 37bn koruna ($1.12bn) for the distributor stakes with the government will paying CZK15bn for Ceps, the national grid operator. CEZ has until June 2006 to meet the net payment.

    It is expected that CEZ will finance the purchase from the domestic capital markets and through loans.

    Confirmation of the deal, which had been public knowledge for several months, formalizes the reorganization of the Czech power sector following the collapse of the planned privatization of CEZ earlier in the year. The government cancelled the sell-off process after protracted delays after no single bidder was able to both satisfy the government’s terms and bid expectations.

    The failure of the privatization has led to CEZ forming a vertically integrated power group. With the Czechs pursuing accession, CEZ it was forced to sell Ceps in order to fall in line with European Union directives on energy market liberalization.

    It is expected that the Czech government will privatize Ceps eventually

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