CEZ has closed the balance of its flood-inflicted damages

Nearly one year and a half after the floods, CEZ and a consortium of insurance companies finished the process of sorting out the insurance losses suffered by its hydropower and coal-fired power plants hit by the floods. The total acknowledged damage amounted to 766million CZK, of which CEZ is covering 50 million CZK. CEZ has already received a part payment of 580 million CZK from insurance companies. In August 2002, the Czech Republic was hit by disastrous floods, which caused significant damage to the CEZ property. The floods affected the hydropower plants Orlik, Stechovice, Korensko, Kamyk, Vrane, the Melnik coal-fired power plant and the cooling water intake pumping station of the Ledvice power plant complex. In addition to the damages of the production machinery, the floods also affected other property (warehouses, computational and telecommunication technology, subsidiary buildings).

Kooperativa pojistovna, a.s, functions as the main insurer, covering the risks of coal-fired and hydropower plants.

The Orlik and Stechovice plants have not been put into full operation yet. One unit in Stechovice and three out of four sets in the Orlik power plant are still not capable of generating electricity. The first unit of Orlik was re-launched at the end of the last year and the re-launch of another plant unit is scheduled for February this year. However, all power-generating facilities on the Vltava cascade will not be fully operational until the second half of this year.

"This has been the largest insurance claim we have ever had to cover. Its scope is absolutely unparalleled to anything we have dealt with so far and I sincerely hope nothing like it will ever come up again. On the other hand, the floods have proved that the attention we have been paying to risk management is justified. The fact that most of the property in question had been insured prevented the company shareholders from suffering the consequences of asset depreciation," said Mr Jaroslav Suk, the Director of the Financing Section.

Damage to property was not the only adverse affect that CEZ suffered due to the floods. The flood-inflicted damages of the production units also had a negative impact on the amount of sold electricity and backup services. The smaller electricity demand prompted CEZ to make an offer to the distributors, offering to purchase a contracted volume of electricity from them. The distribution companies accepted this offer.

Ladislav Kriz, CEZ Press Officer

7. 1. 2004