More information emerged yesterday regarding the Germany government’s stance on CEZ’s Temelin nuclear power plant. The picture that is emerging is that the German Ministry of Environment, most likely on behalf of the federal government, has stated its critical position on Temelin within the framework of the environmental impact assessment process administered by the Czech Republic and Austria. Confirmation by a German federal government spokeswoman that the document represents the government’s view hastened the stock’s dramatic fall yesterday. Later in the day, after the stock was already suspended from trading, the German foreign minister moderated the German position somewhat (saying that the document was not a resolution of the federal cabinet and that the Temelin issue would not affect the Czech Republic’s EU candidacy), but did reiterate that there the Czechs were being appealed to consider halting the Temelin launch. Although the political weight behind the critical document is still not entirely certain, it is significant enough to put the Czech government under increased pressure regarding Temelin. The inner Czech Cabinet (the prime minister and deputy prime ministers) will likely discuss the issue at their regular meeting today, and some kind of official Czech response may come from this meeting or from the Cabinet meeting scheduled for tomorrow. We expect some kind of polite rejection of the criticism. The CEZ executive responsible for Temelin said that the document uses out-of-date information.
Also, CEZ said that halting Temelin would result in a CZK 115 bil. cost to the company. Given that the resulting loss would wipe out most of CEZ’s equity (CZK 129 bil. at the end of 2000), we believe that government intervention would be inevitable given this hypothetical case.
Separately, a Ministry of Finance spokesman confirmed that the ministries of finance and industry will propose to the Cabinet on Wednesday that a power-sector privatization advisor be directly selected (in order to speed up privatization), and that Deloitte & Touche be proposed as the advisor for power-sector privatization. This news should not have an impact on CEZ stock.
(Ondřej Daťka)