Varna Power Station definitely CEZ Group Member: Transaction completed

Today is the milestone in carrying into effect our vision of becoming a leader in the power markets in Central and Southeast Europe. Both sides' negotiating teams have done a very good job, hence, we are adding this significant power station to our present Bulgarian distribution companies. This acquisition confirms our previous declarations that CEZ Group's plans of operating in Bulgarian power sector are long-termed. So far, our experience with the business scene is favorable; our Bulgarian colleagues are actively getting involved in business activities of the entire CEZ Group not only in Bulgaria. We can say after two years that entering the local market was the step in the right direction, which is confirmed by good results of our Bulgarian distribution companies whereas both parties are benefiting by this business integration,Ă¶ said Mr. Martin Roman, the Chairman of the Board and CEO of CEZ.

The CEZ Group disposes of long-term experience with the operation and ecological acceptability of thermal power stations whose installed output constitutes more than one half of our generation portfolio. In the years 19921997, we completely desulphurized all our thermal power stations so that they meet rigid emission limits of the European Union, and now we are in the stage of drawing up a comprehensive program of reconstruction of our production portfolio. We plan to apply all this experience also in the Varna power station, added Mr. Jiri Borovec, the Vice-Chairman of the Board and Chief Generation Officer of CEZ.

Mr. Jan Vavera will become the new Board Chairman in Varna. He comes to the power station from the Czech Republic leaving the position of the Investment Preparation/Realization Director (in power stations of CEZ Group). His objective will be to enhance the power station operation to the level corresponding to the standards and norms of the European Union.

In the framework of the privatization project, the CEZ Group has invested additional EUR 100 million in the power station for raising the power station capital stock by 16% to cover necessary investment costs. Moreover, CEZ committed itself in the memorandum signed with the Bulgarian Ministry of Economy and Energy Industry to invest within 4 years EUR 40 million in energy-related projects in Bulgaria. These projects fall into the category of renewable resources - water power plants, biomass burning, or energy infrastructure.

The Varna power station is situated in Northeast Bulgaria near the Black Sea harbor with the same name. This location represents a relatively significant logistic advantage. Thanks to its installed output of 1,260 MW (6 x 210 MW), the Varna power station will become the largest thermal power station in the CEZ Group making the Prunerov II power station, so far the largest source located in Northern Bohemia (5 x 210 MW), the CEZ second largest energy generating coal source. The Varna power station burns imported black coal and it produced approx. 2.3 TWh of electric energy in the year of 2003. However, it is expected that the electricity production will progressively go up in ten years to come primarily due to the modernization and increasing demand for electricity in Bulgaria and in the whole region of Southeast Europe.

In the framework of its foreign expansion, the CEZ Group already succeeded in Bulgaria where it owns three Bulgarian distribution companies in the country's West since January 2005. In the distribution field, CEZ also acquired the Electrica Oltenia distribution company in Romania providing electricity in the region directly bordering on the Bulgarian distribution territory of the CEZ Group. In the power generation field, the CEZ Group already acquired two Polish energy-providing companies of Elcho and Skawina this year and continues searching for additional opportunities within its target region in Europe Central and South-East.

Eva Novakova
Press Officer, CEZ, a. s.

Appendix 1: Mr. Jan Vavera's (39) CV

Mr. Jan Vavera will become the new Board Chairman in Varna. He comes to the power station top management from the Czech Republic leaving the position of the Investment Preparation/Realization Director. In this position, Mr. Vavera was managing processes of the project design and implementation of investments of the CEZ Group for nuclear, thermal, and water power stations in the Czech Republic. He managed, for example, the projects for the construction of the spent nuclear fuel depository in the Dukovany nuclear power station or participated in the approval process of the Temelin nuclear power station facilities.

Mr. Jan Vavera graduated at the Faculty of Nuclear Power Stations and Equipment of the Moscow's Energy Institute in the field of physics and thermodynamics. From 1991 to 2003, he worked in the CEZ's Dukovany nuclear power station, successfully sat the examination of the primary circuit operator in 1993, participated in resolving emergency readiness and nuclear safety in the vicinity of the Dukovany nuclear power station. From 2000 to 2003, Mr. Vavera managed processes of the pre-project and project design and implementation of investments in the Dukovany nuclear power station. Mr. Vavera is married; in addition to his family he primarily goes in for sports activities and also contemporary graphic arts. Appendix 2: Installed capacity of the CEZ Group

Appendix 2: Installed capacity

Installed capacity of the CEZ Group
Czech Republic	12 298 MW
Poland	810 MW	Elcho and Skawina plants
Bulgaria	1 260 MW	Varna TPP
Total	14 368 MW

Appendix 3: Foreign acquisitions of the CEZ Group

Country	Year	Company	Price

Bulgaria	2004	Distribution companies Stolichno, Sofia oblast, Pleven	281.5 mil. EUR
Romania	2005	Distribution company Electrica Oltenia	166.5 mil. EUR
Poland	2006	Power plants Elcho and Skawina	383.3 mil. EUR
Bulgaria	2006	Varna TPP	206 mil. EUR*

* Additional EUR 100 million has been invested for raising the power station capital stock

2. 10. 2006