The Czech HN daily reports that Enel/Iberdrola yesterday submitted the same bid as in the first round of the tender bidding (CZK 140 bil. for CEZ and six distributors). EdF reportedly bid CZK 213 bil., but seeks a payment period of 5-10 years (the present value of the bid is therefore unknown, but is extremely likely to be well below the required minimum of CZK 200 bil.); moreover, EdF also seeks guarantees for CEZ’s nuclear assets, and it does not want to accept the tender-required purchases of domestically produced coal and required minimum electricity production, required for a fixed period.
The Czech daily MFDnes reports that the noncompliance of the bids with the CEZ privatization conditions will lead the inter-ministry commission to propose a cancellation of the current tender to the Cabinet.
It is expected that the Cabinet will discuss CEZ privatization on Wednesday, January 9, but the issue is not on the official agenda.
Given the above, we believe that a direct CEZ sale-cited recently as an option by the Minister of Industry in lieu of a tender-is highly unlikely (the selling criteria would have to be the same, and it is unlikely that any company, which did not take part in the tender, would accept these criteria). Therefore, it is likely that CEZ will not be sold before the forthcoming general election in June 2002; a new privatization tender could not be expected to commence, then, sooner than summer-autumn 2002.
We believe the tender fiasco and expected privatization delay is, to a large extent, already factored in the stock’s current market price, therefore we do not expect any long-lasting downward pressure on the stock.
(Jiri Soustruznik)