Anti-monopoly authority could delay energy sector privatisation

The Czech government?s ambitious plan to privatise the whole energy production and distribution sector in one huge package could now be delayed. In a recent ruling, the Czech anti-monopoly authority said the privatisation project jeopardised competition in the industry. The authority made a veiled threat to intervene, raising fears that the long-awaited privatisation of the nation's energy sector could be delayed again.

In a non-binding report, the anti-monopoly office said fair-market competition in the Czech energy sector would be endangered if the government pushes ahead with the current plan to sell its majority stake in the dominant power utility CEZ together with transmission lines and six power distribution companies. Four foreign energy companies or consortiums are currently bidding for the multi-company package, which could yield the Czech government around 8 billion US dollars. A winner is expected to be picked and a deal signed by the end of the year.

Analysts say the anti-monopoly office can't stop the actual sell-off, but a possible monopoly-busting intervention is likely to delay and complicate the whole process. The regulators would have to approve a merger of CEZ with the distribution and transmission holdings before coming under the umbrella of a single energy company.

The terms of the privatisation deal are now the focus of negotiations between the government and the four bidders: Electrabel of Belgium; the French power giant Electricite de France; a consortium of Italy's Enel and Spain's Iberdrola; and a consortium of NRG Energy of the United States and Britain's International Power.

A possible delay in the energy-sector privatisation could complicate the government?s calculations - the minority Social Democrat cabinet have promised to speed up the privatisation of remaining state assets and use the proceeds to patch holes in the deficit state finances.