The current ODS-minority Cabinet's programm proposal includes retention of the current mining limits and no building of new nuclear blocks in order to win the vote of confidence from the Greens and Christian Democrats. Note that the Vote of confidence is scheduled for October 4. The current Government seeks to bring the country to early elections in April/May next year.
Our view:
We believe that the proposal is aimed at winning the confidence vote from the Green party in particular and would be only temporary, i.e. until the new elections next year. Breaking of current mining limits would allow CEZ to replace up to 70% of its coal fired power plans against 40% should the limits be preserved. The large share of CEZ's lignite coal power plants on its capacity mix (c54%) gives the company a competitive advantage over its regional peers and allows the company to realize high operating margins.