Standard & Poor’s said yesterday that the Czech government’s newly announced energy-sector restructuring plan could have a positive impact on sector credit quality, though it will await the further development of the plan before taking any rating action. Moody’s has left its Baa1 rating for CEZ unchanged.
The Czech MFDnes daily newspaper reports today that CEZ had a 5-year contract with Enron, dated from 2000, for supplies of 2.5 TWh a year (approx. 4.5% of CEZ’s total production) in which Enron was reportedly due to pay EUR 18 per MWh, a rate quite disadvantageous for CEZ. Other terms of the contract were unfavorable for CEZ as well (e.g., sanctions for contract termination by CEZ). After Enron’s bankruptcy, Electricite de France bought the contract from Enron and higher prices were re-negotiated by CEZ. The original contract was signed by the previous CEZ management. Since the issue seems to have been resolved with better terms for CEZ, we do not expect the stock to react to the report.
(Jiri Soustruznik)