The Prague MFDnes newspaper reports that, as of July, CEZ effectively stopped supplying power to E.ON, the German utility. E.ON decided earlier in the year to stop buying power from CEZ given pressure from the anti-nuclear lobby in Germany (related to CEZ’s Temelin nuclear plant). The two companies say they are still negotiating (the termination of the supply contract and compensation to CEZ). The contract was worth CZK 2 bil. this year, according to the paper, which amounts to 3.6% of CEZ’s expected 2001 sales. E.ON’s decision to break its contract with CEZ is clearly negative, but given that this has been known for some time, we do not expect the stock to be unduly affected by the newspaper report today.
Separately, the government committee evaluating the environmental impact of Temelin will submit its report to the Foreign Ministry today. The committee and the report were a result of a December 2000 agreement between the Czech and Austrian governments. A committee member is quoted as suggesting that Temelin’s environmental impact was found to be “insignificant.” It is unlikely, however, that the report will take much pressure off CEZ. Neutral for the stock.
(Ondřej Daťka)