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CEZ Power Company would not like to sell its share in Severoceska energetika

25. 11. 2004

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CEZ Power Company would not like to sell its share in Severoceska energetika

CEZ´s attorneys, on behalf of CEZ Power Company, have lately filed for a change of a precedent decision of the UOHS (Office for the Protection of competition), which had decreed that CEZ, apart from other things, should sell a majority share in one of Czech distributional firms of the CEZ Group. CEZ has decided that the possibly sold company would be Severoceska energetika (SCE), where CEZ owns 56.93 %.

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n case of a sale of a majority in one of five distributional firms (REAS), CEZ proposes a change of the decision, because there have been significant changes on the market, relating to the entry of the Czech Republic (and other countries of Central and Eastern Europe) into the EU (and due to the fact that all other requirements have been satisfied), since the ruling was given.

These changes concern mainly the area of the power legislative and the real changes on the power market, which have appeared in connection with the preparation and entry into the EU. Within the EU market, CEZ has a share of less than two per cent and ranks ninth in Europe, after the giants like the French EdF, German E.on or RWE, Italian ENEL, etc. It is probable that the share would be acquired by a competitor with a larger share than is owned by CEZ in the sale, which would certainly not help to develop the market.

CEZ has asked for a change of the decision of the chairman of the Office ref. no. R 77/2002 from 18 March, 2003, pursuant to Article III paragraph 5 of the first part of the Act no. 340/2004 Sb. By this resolution the office conceded a joint of CEZ and REAS (regional electricity distributors), and stipulated requirements, which should ensure maintenance of an effective economic competition.  It ordered to sell a share in CEPS, sell all minority shares in REAS, i.e. in JCE, JME and PRE, and also sell one of five REAS where CEZ has majority equity stakes. The decision was issued in the time, when the Czech electro-power industry was in the first phase of its deregulation and market liberalization.  It was not clear then, if the liberal competition mechanisms would become a sufficient substitution for the full regulation of the industry.

CEZ has already fully satisfied the requirements that consist in the sale of a share in CEPS and a sale of minority shares in JCE, JME and PRE: the share in CEPS has been sold to the Czech Republic, which ensures that the decision making process of the market operator is absolutely independent not only of  CEZ, but of any other power subject. The shares in JME and JCE have been sold to their majority owner E.on. The share in PRE has been successfully sold to the financial investor J&T.  

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