Business News


This week in business news: the government’s economic advisory council says state institutions are not being frugal enough; fuel prices are breaking high records for the second week in a row; a Czech company will build wind generators in Pakistan; hops harvest this year is drastically lower than usual; and the two main Krkonoše ski resorts will now be run by private companies.

NERV analyst: government raises taxes instead of saving

Aleš Michl
Aleš Michl, an analyst at the government’s economic advisory council NERV criticized the willingness of Czech ministries and other state administrative bodies to significantly cut their budgets. Michl, who is also an analyst for Reiffaisenbank, said Wednesday that the state plans to save approximately 1.6 billion crowns between this year and 2014, inclusive. This number though, is relatively insignificant compared to the 1.5 trillion crowns that the state spends each year. Michl based these claims on a document where all public administration offices stated how much they planned to save in the period from 2012-2014. It turns out, ministries and other institutions anticipated saving approximately 0.044% of their expenses during this time. Michl pointed out that the government plans to keep their promise of lowering spending and the deficit by simply increasing taxes.

Fuel prices keep breaking records

After fuel prices skyrocketed last Wednesday, this week saw more records broken at Czech gas stations. Prices for Natural 95 gasoline grew by approximately 13 hellers, bringing the average price to 38.17 crowns per liter, according to figures provided by CCS on Thursday. The prices of diesel went up as high as 37.17 crowns per liter. Some gas stations, though, sold fuel for as much as 40 crowns per liter. Analysts believe the surge in fuel prices had been caused by rising prices of oil on world markets as well as the weakening Czech crown to the dollar.

Czech wind generators to be built in Pakistan

Illustrative photo: European Commission
Czech firm Wikov Wind will begin building 25 wind generators in Pakistan in January. The Hradec Králové company closed a two-billion-crown deal to build wind farms in the Sindh province of Pakistan, the news agency ČTK reported quoting the Pakistani publication Business Recorder. The construction of complete wind generators that will produce 50 megawatts of power, should conclude by the end of next year. The company’s owner, Martin Wichterle, said that they are planning other energy-related projects in Pakistan for the future.

Hops harvest suffers

With the hops harvesting in full swing in the Czech Republic, the Hops Research Institute in Žatec is warning that this year’s harvest will be even worse than was expected. The current yield is on average one tone per hectare, which is about two thirds of the yield from the past years. Approximately a third of the yearly hops yield goes to Czech breweries. Another third goes to Asian beer producers, and the rest to Europe and other regions. Last year, more than 4,000 tons of hops was exported, bringing around 900 million crowns to Czech producers.

Krkonoše ski resorts will be run by private companies

The Czech Sport Association will be renting out their skiing facilities in the popular resorts of Špindlerův mlyn and Pec pod snežkou in the north of the country to private investors. A Czech and Slovak owned company Melida will rent the Špindlerův mlyn skiing resort for 43.8 million crowns a year, while the Pec pod snežkou resort will be operated by Mega Plus, which will pay 15 million crowns. The rent that the Sport Association will be receiving from the private companies is higher than what the association earns from operating the two resorts on its own. Both companies have also agreed to substation investments into the locations in the next 20 years, which is the duration of the current contracts. Melida belongs to the T&R group that runs a number of ski resorts, including ones in the Czech Herlikovice and Chopok in Slovakia.