Bloomberg News

CEZ Looks to Sell Coal-Fired Power Plants in Supply Dispute

May 31, 2012

CEZ AS (CEZ), the Czech Republic’s largest electricity producer, is considering the sale of two ageing coal-fired power plants because of a dispute over supplies in advance of tougher emissions rules.

CEZ may sell the northern Pocerady and Chvaletice plants after long-term supply contracts expire next year, according to a statement today.

A legal dispute over the price of brown coal supplied to the plants by Czech Coal Group has led the company to explore a potential sale. Built in the 1970s, the plants require investment in excess of 20 billion koruna ($969 million) each to reduce carbon dioxide emissions by 2016 when tougher environmental requirements come into effect, CEZ has said.

Czech Coal and EP Holding, a local utility, have already expressed an interest in the plants and CEZ is ready to review other offers, spokesman Ladislav Kriz said today in an e-mailed statement. Czech Coal would be the logical buyer of the Pocerady plant, which is located 5 kilometers (3 miles) from its Vrsany mine, said Marek Hatlapatka, an analyst at Cyrrus AS brokerage.

“The value of the assets depends very much on the buyer,” Hatlapatka said. “Czech Coal could afford to pay a higher price for Pocerady because it could then supply it with its own coal. It makes sense.”

The Pocerady plant operates five 200-megawatt units, while Chvaletice has four 200-megawatt units, according to the company.

To contact the reporter on this story: Ladka Bauerova in Prague at lbauerova@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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