MfD: ČEZ, EC to discuss change to agreement on power plants sale

Prague, Feb 11 (CTK) - The Czech energy group CEZ and the European Commission (EC) will discuss a change to the draft agreement on a voluntary sale by CEZ of one of the five power plants it has selected, the daily Mlada fronta Dnes (MfD) said yesterday.

Through the agreement CEZ will avoid the threat of a huge fine from Brussels for limiting competition on the domestic market, MfD said.

CEZ has decided not to sell the Pocerady plant which is one of the five facilities picked up for sale by the group, the paper wrote.

MfD says that Brussels raised objections to the black coal-fired power plant Detmarovice whose potential sale would not solve the original cause of the investigation, that is curbing the entry of new players into the market for brown coal power generation.

"Yes, we will discuss again our draft," CEZ CEO Daniel Benes told MfD.

The draft is based on last year's demand of the EU that CEZ sell voluntarily one 800 megawatt plant and the EC will in turn not commence administrative proceedings against it.

CEZ made a list of the relevant facilities, namely Pocerady, Chvaletice, Detmarovice and possibly two smaller plants Melnik III and Tisova.

The EC launched the probe into the case upon a complaint from the mining company Czech Coal, owned by financier Pavel Tykac. CEZ allegedly prevented the firm from getting a permit to build its own power plant. Czech Coal and CEZ are now drafting a contract on long-term coal supplies that also deals with the future ownership of Pocerady in which Czech Coal had expressed interest. CEZ is not going to sell Pocerady but Czech Coal will apparently enjoy a pre-emptive right to the facility after 2024, MfD said.

CEZ claims it decided not to sell Pocerady because of the prepared contract but mainly because it found the price bids too low. Czech Coal reportedly offered Kc16bn. The energy group Energeticky a prumyslovy holding has also submitted an offer.

According to MfD, the modified agreement with Brussels will not probably include Pocerady, and Detmarovice will be put up for sale along with a brown coal-fired facility, possibly the smaller plant Tisova. The agreement will certainly comprise Chvaletice in which EPH as well Czech Coal have shown interest.

The biggest progress has so far been made in the sale of Detmarovice, MfD noted. Gazkontrol has offered the biggest price of Kc1.2bn for the plant. EPH is another bidder, the paper wrote.