Press public statement of CEZ power company

CEZ Power Company noted the governmental decision to postpone the final choice of a strategic partner of CEZ until January 7, 2002, due to a low price of the offer. CEZ regards both the speed of the privatisation process and the acquisition price as essential factors for maintaining or even strengthening the position of the Czech fuel and power production complex in the competitive environment of the European market and enabling its expansion in the Central European market. The strategic partner will undoubtedly contribute to the stabilisation of Czech power industry.

CEZ thinks it is absolutely vital that the strategic partner is chosen in the immediate future. Otherwise there is a danger of increasing pressures that might result in de-stabilising the entire power industry and affecting the transparency of the newly emerging Czech electricity market. This could further escalate into a situation, in which the price of the product ceases to be the most important factor of success. Such a situation might consequently result not only in a gradual disintegration of the Czech power industry, but also in a limited employment of the domestic suppliers of raw material and services.

Ever since 1992 CEZ has been selling its electricity to distribution companies for a constant price of approx. 1.14 CZK/kWh. If we take into account the inflation rate, we may conclude that the real value of the offered prices has decreased approximately by half since 1992. It is difficult to find any other company that has been offering its products for the same price for a whole decade. Moreover, the cost-effective and rationalising measures made it possible for CEZ to offer even cheaper electricity for next year. Its new offer of so called Rainbow Electricity" for the year 2002 is cheaper than the electricity supplied to the domestic market this year. CEZ assumes that the price of the offered electricity will be approximately 5 per cent lower than the limit set by the Energy Regulation Authorities. However, in the Czech Republic there is no link between energy production and distribution channels, which is why the end consumer does not feel any palpable effect of the cheaper production of CEZ.
The public is being fed with an allegedly liberal thesis that more owners of monopoly networks create a functioning market. This thesis deliberately confuses the ownership of networks with the commercial usage of these networks. However, the establishment of a competitive environment cannot be based on the fact that the networks in different localities are owned by different business entities. Such an environment can only be established when all market participants dealers, producers, etc. - have access to the network.

CEZ believes that the strategic partner will be chosen at the beginning of next year. European market will soon be divided between five or six newly merged multi-utility suppliers of electricity, gas and water, who also offer telecommunication services etc. We are convinced that to be a self-confident part of one of these entities is more acceptable than to wait and be gradually squeezed out of the market. The topic of Strategic partner and CEZ? concerns the future of the entire industrial branch. The privatisation process is being carried out in the neighbouring countries as well and if the Czech Republic wastes the precious time (especially now, when the gas industry has already got its strategic partner) it will be necessary to implement some other prompt measures ensuring the stability of the Czech fuel and power production complex.

Ladislav Kriz, CEZ Press Officer

18. 12. 2001