CEZ has signed agreements to acquire the majority stakes in two Polish power plants Elcho and Skawina.

The fact that we managed to achieve our first success in Poland, and immediately in two acquisitions, is very pleasant. It is a clear sign that we take a special interest in operation on the Polish market. After the Bulgaria and Romania, we have been successful in fulfilling our vision to become number one on the electricity markets in Central and South-Eastern Europe, and even in Central-European region. Even more enjoyable is the fact that we managed to be a success in both cases, that is in the tender for the power company Elcho as well as for the share in the Skawina power plant, said Martin Roman, Chairman of the Board and CEO of CEZ at the conclusion of the agreement.

The sale of our interests in the two facilities is part of a publicly announced and ongoing program of selectively reducing corporate exposure to international markets when attractive opportunities are available, said Robert Dougherty, president, PSEG Energy Holdings, the parent of PSEG Global, and itself a direct subsidiary of PSEG.

Both power plants are situated in a rapidly developing area of Poland, which opens an additional space not only for electricity supply, but heat supply in particular. Moreover, both Elcho and Skawina are located not far from the CEZ's power plant Detmarovice (50, 100 km respectively) this proximity is favourable for possible future synergies in range of activities, including the possibility of joint coal supply, which could lead into cost reduction. To compare, the output of both plants is bigger than the output of our large plants in Chvaletice or Detmarovice (with 800 MW output), added Jiri Borovec, Vice chairman of the Board and the director of the Generation division.

The transaction should be settled in the forthcoming months and is a subject to regulatory and other approvals. According to the agreement with PSEG, the purchase price remains confidential at this time.

Skawina and Elcho power companies are located in Southern Poland and both produce combined electricity and heat. CEZ Power Company will indirectly gain a c.a. 75% share in Skawina and c.a. 89% share in Elcho from PSEG.

The bituminous coal-fired power plant Skawina has a generating capacity of 590 MW and produces about 2.8 TWh of electricity per annum. Within its combined production of power and heat, the plant supplies heat and hot water to the Western part of Krakow and the city of Skawina. It supplies electricity to several local distribution and trading companies in Poland.

Elcho is situated in the city of ChorzĂłw 8 km South-West of Katowice. Its two modern units with total generating capacity of 220 MW produce combined power and heat. 100 % of the produced electricity is supplied to PSE, the operator of the Polish transmission grid while heat is supplied to a region covering several municipalities in the Katowice Region of Silesia.

CEZ (PSE: CEZ) continues its foreign expansion, in which it has already managed to gain majority shares in three Bulgarian and one Romanian distribution companies, and keeps participating in other tenders in the target areas of South-Eastern and Central Europe. CEZ was, together with three competitors, chosen in the privatization tender for a Macedonian company ESM, in the middle of December it was again confirmed in the privatization tender for the Polish coal-fired power plant Kozienice.

The CEZ Group is one of the key entities in the utility field in Central and South-Eastern Europe, and one of the ten biggest energy players in Europe, both in terms of installed capacity and the number of customers. The Group operates an installed capacity of over 12 GW in fifteen thermal power plants, sixteen hydro power plants, two nuclear power plants, two wind and one solar power plant. It has controlled five of the eight electricity distributing companies in the CzechRepublic since 2003. The CEZ Group serves 3.4 million customers in its domestic market, and a total of 6.6 million end customers in all its markets.

Market capitalization of CEZ has got over 20bn USD in these days, which was supported, together with increasing stock quotation on the stock exchange, by stronger exchange rate of the Czech crown. According to its market capitalization, CEZ has caught up on such world firms as Sharp, Veolia or Volvo.

PSEG (NYSE: PEG) is a diversified energy company. Its principal subsidiaries include PSEG Holding, which invests in electric and gas distribution systems and generation companies in the USA and around the world; PSEG Power which owns and operates more than 16,000 MW in the USA; and PSE&G, a gas and electric distribution company in New Jersey, USA.

Eva Novakova, Press Officer CEZ, a. s.

31. 1. 2006