According to the Minister of Energy and Development, Milan Jelic, CEZ should sign an agreement with the state about a joint venture where CEZ would build a new 600MW power plant while the state would provide coal mines and power plant in Ugjevik. CEZ’s investments should total EUR1.5bn.
Our view: The news certainly positive, though, we think that the market has been expected CEZ to finalize the preliminary agreement with the Bosna’s state signed earlier this year. The electricity consumption per capita is Bosna&Herzegovina stands at 1,976KWh vs. 5,520KWh in the Czech Republic and the EU average of 9,000KWh. Therefore, we believe that construction of a new power plant would certainly create a value given the expected growth in electricity consumption on one hand and expected closures on existing power plants due to age and environmental issues.