The Cabinet has authorized Finance Minister Jiri Rusnok to sign asset swap contracts with CEZ by Friday, June 14, the Czech daily Pravo has reported. The contracts will be signed despite that the transmission grid to be sold by CEZ to the state has not yet undergone an valuation, which could encumber the contract, we believe. Furthermore, we believe there are other issues which could yet impede the transaction: (i) the Anti-Monopoly Office could halt the transaction due to the low valuation of the distributors, and due to concerns regarding CEZ’s increased market share; (ii) the new Cabinet (there are national elections June 14 and 15) may well choose to reverse the transaction, and (iii) the transaction could be challenged on legal grounds. This leaves considerable uncertainty regarding the plan’s successful completion.
(Jirří Soustružník)