Shakeup at ČEZ is not yet over

With the dust barely settled on the removal of CEO Martin Roman in early September, state-owned energy giant ČEZ continues to surprise with further shifts in management and a plan from new CEO Daniel Beneš that seemingly runs counter to the strategic shift demanded by Prime Minister Petr Nečas for a greater focus on domestic energy needs.

On Sept. 28, the company announced the dismissal Vladimír Schmalz, director of mergers and acquisitions for the past seven years under Roman. The move comes as part of a restructuring that will put mergers and acquisitions under the international division rather than directly under the CEO.

Beneš said the change was part of the company's renewed focus on developing business in the Czech Republic. However, just days before, Beneš had unveiled ČEZ's future strategy, which called for investments in up to 3,000 Megawatts (MW) of renewable energy abroad, including in Poland, Germany and Romania.

The information about the plan "seems a little strange," said Atlantik analyst Bohumil Trampota.

"I don't understand this, because they said, 'We are focused on domestic markets, not major acquisitions abroad,' and they suddenly released this plan to invest in renewable resources," he said.  

The investments, which are expected to reach around 100 billion Kč, are meant to harness subsidies in countries that support renewable energies to raise 200 billion Kč for the expansion of the Temelín nuclear power plant, a project meant to start in 2016.

"There's not a lot of information yet, so we should expect some more details in the coming months," said Komerční banka analyst Josef Němý. "It's hard to say what's behind it. Maybe they feel the credit markets are more difficult, so they were reacting to that."

The plan seems to run counter to Petr Nečas' reasoning for replacing Roman, which Nečas said was part of a shift from a period of massive foreign acquisitions to one with a domestic focus. Under Roman, ČEZ became the largest utility in the region, but also became stretched thin in recent years as acquisitions contributed to negative financial results and a downgrading of the company's bond rating.

Nečas has said little about the plan to invest in renewables abroad, other than to tell the daily Lidové noviny that it was an option, but that nothing had been finalized.

Analysts said not enough information is available to make real judgments on the company's strategy, but said they don't expect the foreign acquisitions will end up being major.

Recent events have "shown ČEZ is not an independent company, but is owned by the state, and political influence is increasing," Trampota said.

Beneš listed his top priorities as completing the addition of two new nuclear reactors at Temelín and prolonging the life span of the Dukovany nuclear plant until 2025, as well as cutting costs, ensuring coal supply and limiting the development of renewable energy resources.

Cat Contiguglia can be reached at
ccontiguglia@praguepost.com