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Czech Coal courts investors

After failed ČEZ talks, company looks for new power partner

By Paul Voosen
Staff Writer, The Prague Post
July 18th, 2007 issue

The mining company Czech Coal is talking with several international companies interested in constructing a coal-fired power plant near Czech Coal’s two mines in north Bohemia, the company says.
It is expected that such a deal could involve a large energy utility from Europe, such as E.ON of Germany or Enel of Italy. The company hopes to announce more details within the next couple weeks, spokesman Radek Stavěl said.
Entry into the Czech market by any large foreign power generator would mark the first true challenge made to the dominance of state-owned ČEZ, which generates almost all of the country’s electricity.
The relationship between ČEZ and Czech Coal has fallen apart this past year. In 2005, the companies signed a long-term contract for cooperation with the plan that Czech Coal’s mines, which have reserves lasting until 2055, would supply a new plant to be built by ČEZ in Počerady, replacing an existing plant set to close in 2015.
According to ČEZ, at the end of last year Czech Coal proposed establishing a joint venture to build the new plant. Talks fell apart as Czech Coal kept increasing its demands, says ČEZ, including the requirement that ČEZ commit itself to forcing the repeal of state mining limits set in 1991.
Czech Coal ended discussions with ČEZ July 3 and began to seek foreign partners. In response, ČEZ filed a lawsuit against Czech Coal earlier this month, saying the company has not honored the 2005 agreement. Czech Coal has called the suit “unsubstantiated.”
One company rumored to be interested in a deal with Czech Coal is the giant E.ON, which already distributes energy in the country. E.ON’s CEO, Wulf Bernotat, visited the firm’s Czech branch July 18. The visit was purely internal, said Vladimír Vácha, E.ON spokesman.
However, E.ON is “ready to join a project, if there’s a possibility to step into power generation [in the Czech Republic],” Vácha said. “It doesn’t depend on any company or firm. We are open to talks.”
Bringing in a foreign competitor will help combat quickly rising electricity prices, Czech Coal says. The increased competition for electricity trading that will be seen with the Prague Energy Exchange isn’t enough, Stavěl said.
“I strongly believe in [increased competition],” he said. “Not only in free competition on electricity trade market, but free competition on the energy generation market, which can help reverse the current trend in energy prices.”
ČEZ disputes this notion, saying Czech electricity prices are the lowest in Central Europe, said spokeswoman Eva Nováková.
“The Czech Republic, from the electricity-trading standpoint, is the most open country in the whole of Europe,” she said.

Paul Voosen can be reached at pvoosen@praguepost.com


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