The anti-monopoly office reversed its previous ruling, saying that CEZ does not have to sell its majority stake in Severoceska Energetika (SCE). We see the decision as positive for CEZ given the strategic position of SCE (at the German border) and hence the elimination of the risk of entry by E.ON or RWE into the region.
The decision is conditional on CEZ allowing independent power producers (IPPs) access to 400MW of its capacity (3% of CEZ’s total capacity) between 2006 and 2007. At this moment we cannot estimate the costs of the condition to CEZ, as the price CEZ receives will be subject to tender. Nevertheless, CEZ will be able to set a minimum price and the time period is relatively short. We estimate that the potential costs will not exceed CZK 1.5bn.