The sell-off of a majority stake in the Czech Republic’s power utility CEZ was cancelled yesterday when revised bids failed to match the minimum price set by the government but the door has been left open for a direct sale to one of the bidders.
The bid by a consortium of Italy’s Enel and Spanish utility Iberdrola fell well short of the 200bn crowns ($5.6bn) minimum price tag and although Electricite
Following the recommendation of a special advisory committee, the Czech Prime Minister Milos Zeman told a press conference, “Both Enel’s and EdF’s offers were not favourable for the Czech economy and therefore the government rejected them and closed the tender”.
A 67.6 per cent stake in CEZ, combined with the power grid and stakes in six regional distributors were the prize but many other potentially interested parties were unwilling to bid for the grouping, which included CEZ’s controversial Temelin nuclear plant, due to the restrictions imposed. The Czech government was unwilling to allow the assets to be broken up or sold on within the next eight years and were looking for commitments from the new owners to electricity production criteria and minimum coal purchases.
“The Czech Republic is not in bankruptcy so we do not need to sell CEZ for any price,” said Miroslav Gregr, industry minister. The ministries of industry and finance will now propose another method of privatization before the end of February. Mr Gregr confirmed one option could be a sale to one of the bidders.
The long-stalled privatization plans were inherited from the previous right-wing cabinet and Prime Minister Zeman had been hoping to complete the sale ahead of elections in June. Last month an agreement was reached with German RWE to sell gas importer Transgas for €4.1bn and this influx of foreign funds has reduced the pressure on the administration to achieve a sale of electricity assets.
The breaking up of state utility monopolies is still likely to be a high priority as the country looks to transform its economy in the post-soviet era in preparation for EU membership.