CEZ expects export revenues to be higher in 2005

CEZ informed on Friday that it has secured sufficient transmission capacity for its exports to Germany and Poland in 2005. CEZ said that it will export 16.5 TWh of electricity this year, while for next year the company bought 10% less export capacity. Despite an increase in the auction price of EUR 2 per MWh and a lower volume of exports, CEZ expects export revenues to be higher in 2005 due to a higher growth rate of electricity prices in Germany, The company has already mentioned that it expects lower electricity exports in 2005 but at higher prices, partially due to its ability to sell electricity directly to third parties. We expected the volume sales of CEZ to shift somewhat more towards the domestic market (i.e., a higher export reduction) than the above indicates. While the domestic yield per kWh sold is currently still higher than that for exports (not taking into account export country differences), the above indicates that the gap is closing. We assess the information as neutral.

Separately, Bulgaria has opened a tender for the sale of coal-fired plants located in Varna, Rousse and Bobov Dol. Nine companies have bought the documents for the tender. CEZ is among the interested bidders and has said it will bid for all three plants. The other bidders include the Austrian EVN, the Greek Public Power Corp., the Japanese Mitsui, the Italian Enel, the Russian UES, UK-based International Power and Dalkia, and an affiliate of the French Veolia Environment.

Emission credits will start to be traded on January 1, 2005. Trading will not include the Czech Republic as the EU has not yet approved the assigned number of credits for the country.

Emilia Zampieri, Patria Finance