After yesterday’s high-level talks between the Czech Republic, Austria and the EU, it was agreed that seven safety issues must be further addressed at CEZ’s Temelin nuclear power plant, to which the EU and Austria will contribute to the related costs. The meeting effectively closed the Melk process, a bilateral safety review of Temelin. The agreement struck will have the form of bilateral agreement between the Czech Republic and Austria. Importantly, based on the agreement, Temelin should no longer be an obstacle to the Czech Republic’s closing of the energy chapter (necessary for the Czech Republic’s accession to the EU); the closing is scheduled on December 12.
We believe that the news is positive, and that the stock could react positively to the news, since this eliminates a large part of the uncertainty related to Temelin (especially the scenario of Austria taking a hard stance and demanding a closure of the plant). Nevertheless, it is not clear at the moment (i) how much of the safety upgrade will be financed by CEZ, and (ii) how the agreement might affect the activation schedule and commercial launch of the plant.
Czech Press Agency quotes Industry Minister Miroslav Gregr saying that CEZ, the transmission-grid operator CEPS (fully owned by CEZ), and six regional distributors will all be privatized together, despite the Anti-Monopoly Office’s warning that this would thwart competition in the sector. Mr. Gregr said he has “measures that will enable the process to carry on.” We do not expect the course of the privatization tender to be affected by the AMO’s warning, and Mr. Gregr’s vague comments support this view. The question still remains as to whether the AMO will approve the privatization tender’s conclusion or not. Should it take a hard stance, it could block the completion of energy-sector privatization.
(Jiri Soustruznik)