CSSD’s leader and current PM, Jiri Paroubek, met with the President yesterday proposing a solution to the current deadlock in some kind of co-operation between ODS and CSSD while calling any centre-right coalition program as dead. On the other hand, the centre-right coalition plans to propose today a centre-right government with a limited program including budget for 2007, use of EU funds and change of the election system (odd number of MPs and a bonus for the winning party) leading to early elections for April/May 2007.
Our view: We continue to see two options agreement between CSSD and ODS or early elections, nevertheless, both camps (centre-right and CSSD) do not seem to be able to agree on neither solution yet. Regarding CEZ, which is the most sensitive stock given the issue of mining limits and extension of nuclear reserves, we would see any significant postponement of forming of new Government or early elections to be held next year as negative given the fact that CEZ needs to be able to make firm plans regarding the structure of its capacities given the need to renew the coal capacities as soon a possible given the construction time, increasing electricity demand and falling capacities in neighbouring markets.