21 May, 2002 – The EGM held yesterday by Czech utility CEZ failed to endorse the plan to sell a majority stake in the transmission grid, Ceska prenosova soustava (CEPS) to the government in exchange for holdings in eight distribution companies.
The plan was blocked by the National Property Fund, or FNM, which manages all property in state hands. The government holds 68 per cent of CEZ. CEZ chairman Jaroslav Mil said he was only advised of the FNM’s position shortly before the shareholders meeting began.
In a statement, FNM said the government’s reluctance to endorse the sale Monday is only technical and linked to concerns it has about the legality of a sale between the various shareholders of CEPS. The government wants to make sure all questions regarding a sale are cleared up before it moves forward. There was no immediate information about when and if a sale might be reconsidered.
CEZ is due to pay 21bn koruna ($632m) to the government to acquire controlling interests in the eight electricity distribution companies as part of a transaction in which ownership of the electricity transmission company CEPS will pass to the government.
The figure is higher than his previously estimated CZK17bn as it includes CZK4bn in taxes, said Mil on Monday.
The move to reorganize CEZ into a vertically integrated utility came following a decision by the government to cancel its proposed privatization of CEZ earlier in the year. The plan to sell-off CEZ as one unit failed to attract a satisfactory level of bidding from foreign investors.
CEZ plans to focus on cutting costs at the regional distributors in the coming months. Chulak said end-users are likely to see a decline in the price of electricity as a result of the consolidation, but he didn’t give specific details.
The Czech government is expected to sell off CEPS in line with European Union directives.