The Czech daily Hospodarske noviny today confirms previous reports that only CEZ and RAO-United Energy Systems of Russia are interested in all the assets (i.e., including nuclear) of the to-be privatized Slovenske elektrarne, the dominant power producer in Slovakia. The business plan and bidding price are reportedly the main privatization criteria, though the latter could be affected by a discussed bailout of the highly indebted SE.
While CEZ is generally pursuing a strategy of acquiring distribution assets, SE is an exception in that regard since (i) its power system was built during the Czechoslovak era (when CEZ and SE were one entity), therefore there should be synergies to be realized from a re-unification of the production base, and (ii) limited interest in the nuclear assets among bidders could put CEZ into a favorable bargaining position regarding price. We are of the opinion that CEZ should not engage in aggressive bidding for the 49% stake.
Separately, the Czech sector regulator should issue its decision on electricity prices for 2004 today. CEZ raised its wholesale-price offers for 2004, and its is expected that end prices (regulated in the non-liberalized part of the market: currently customers with annual consumption lower than 9 GWh) will stagnate or rise slightly. CEZ owns five out of eight domestic power distributors.
Jiří Soustružník