According to HN daily, CEZ should decide about JV with coal mining company Mostecka Uhelna (MUS) in June. CEZ negotiates with MUS about investment to coal power plant Pocerady. MUS plans to participate in renovation and building up two new units in Pocerady. CEZ’s estimated investments to Pocerady are about
CZK 40 - 60bn (1,300MW installed capacity). Note that MUS currently supplies power plant with coal and current contract terminates in 5 years. CEZ has preliminary agreement for coal supplies until 2055, however MUS is reluctant to accept them. Both parties refused further comments.
Our view:
We see the news about possible cooperation between CEZ and MUS as a way to solve partially problem with coal supplies for CEZ’s power plant. However CEZ has been indirectly refusing such cooperation in the past. We see the news as neutral for today’s trading.