The company said it has sold EUR 1.8m of power in Germany for a record price of above EUR 40 per MWh. The average wholesale price for the German market for 2005 is about EUR 34 per MWh. The news is positive and confirms our expectation of rising electricity prices in Europe as well as in the Czech Republic. Deputy Industry Minister, Martin Pecina, said that electricity prices should continue to increase in the next three to four years by 20-30% in the Czech Republic given the need to build new power plants. Note that domestic prices are below electricity prices in neighbouring countries, e.g. 18% below Germany. Source: CEZ, Mlada Fronta daily
According to a proposal made by the Ministry of Trade and Industry, CEZ should have a period of 60 days for exclusive talks regarding the sale of the state’s 55% in Severoceske doly (SD). The Cabinet should make its decision on SD’s privatization by the end of June. Therefore, CEZ may become the majority owner of SD by the end of August (CEZ currently owns a 37% stake in SD). We see the value of the state’s stake as CZK 7.5bn. Earlier, PM Jiri Paroubek said that the state should require a price significantly above CZK 7.5bn. As CEZ has secured coal supplies for its power plants until the end of their lifetime, i.e. 2052, CEZ should not be pushed to overpay for SD.