According to HN daily, CEZ will avoid paying the fine for alleged discrimination of mining company Sokolovska uhelna. The issue relates contracted prices for its coal supplies. CEZ agreed with antimonopoly office to adjust its contracts to better reflect current situation on the market, when CEZ is paying more for coal supplies to Severoceske doly as well as to Mostecka uhelna (MUS).
Our view:
Some 40% of CEZ coal supplies are secured from outside sources of MUS and Sokolovska uhelna, latter having 7% share. The value of contract adjustment is CZK 20m a year (cEUR 700k). The issue relates to contracts from 2002 and 2003 valid as of 2009, where inappropriate formulas were used in price setting mechanism. It is only a very marginal part of fuel costs therefore we believe this news to be neutral for today’s trading.