CEZ should announce the result of the auction of 400MW of its capacity for 2006 based on an anti-monopoly decision (relating to the acquisition of Severoceska energetika) today at 2:00pm (CET). Demand was 5.5x higher than the capacity offered. There were 17 parties interested, both domestic and foreign, while 16 submitted bids. CEZ set a price to cover its costs at CZK 4.5m per MW. The auction should serve as an important signal for electricity prices going forward, while the oversubscription should support electricity price growth.
Separately, Enel is reportedly asking for a revision of disadvantageous contracts signed by Slovenske elektrarne in the past. The Slovak Economy Minister Pavol Rusko gave Enel a 2 week deadline. Should Enel continue to insist on the revision, Rusko will propose the cancellation of the sale. Note that Enel offered EUR 840m for Slovenske elektrarne, while CEZ finished second with an offer of EUR 690m. Should Slovakia cancel the sale, CEZ would have a good chance of winning the tender. Nevertheless, we see the likelihood of CEZ stepping back into the game as low.