CEZ has submitted to the government an offer for a purchase of 55 per cent share in Severoceske doly, by which it would increase its 37 per cent share in the company

CEZ Power Company used the opportunity to submit an offer for gaining 55.792 % of Severoceske doly stakes and delivered a binding and irrevocable proposal for concluding an agreement about a purchase of stakes of Severoceske doly a.s. to the National Property Fund of the Czech Republic (FNM), who is the present owner of the stocks.

It is a possibility to gain certainty for the future operation of the new or completely renewed power plants, to which CEZ is going to invest over 100bn CZK in the next years. Factual ownership provides us with higher certainty for future reliable operation of the plants, said Martin Roman, Chairman of the Board and CEO of CEZ.

CEZ and Severoceske doly are mutually very dependent 80 % of SD´s production go to CEZ and cover 60 % of CEZ´s needs. On this account, the merger of both firms is the only logical solution. Our competitors use identical organization.

Brown coal, unlike black one, cannot be exported and freely traded (it is used only in the Czech Republic and former Eastern Germany, transport for long distances is not effective due to low volume heating power). On the other hand, power plants are equipped exactly for combustion of certain coal quality and they cannot be easily changed. There is no market environment here, whatever the ownership is.

In the Resolution No. 887 dated July 13 2005, the government of the Czech Republic decided, besides others, to start exclusive negotiations with CEZ, a.s. in order to prepare a bid for 55.792 % of stakes of Severoceske doly a.s., based in Chomutov, Bozeny Nemcove 5359, postcode: 430 01, IC: 49901982, recorded in the Commercial Register at the regional court in Usti nad Labem, B section, entry no. 495, which are currently owned by the National Property Fund of the Czech Republic.

Ladislav Kriz, Press Officer, CEZ, a.s.

30. 8. 2005