Business News

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In this week’s business news: the unexpected resignation of ČEZ CEO Martin Roman, the opening of the first gas pipeline between the Czech Republic and Poland, the Czech Finance Ministry to launch a pilot issue of retail bonds and Czechs increasingly sceptical with regard to the future of the Eurozone.

ČEZ CEO resigns

Martin Roman, photo: CTK
Martin Roman’s unexpected resignation as CEO of the Czech power utility ČEZ caused a stir in political and business circles this week, sparking speculation as to whether the top manager’s departure was entirely voluntary. Roman, who spent seven years in the post, also quit his place on the company’s board of directors and is now to head ČEZ ‘s supervisory board. He has been replaced by the company’s number two Daniel Beneš who said on Thursday he would ensure continuity in management. ČEZ, the biggest power utility in central Europe is 70 percent state-owned and there has been speculation that the change of guard may have been triggered by the prime minister’s dissatisfaction with the pace of expansion of the Temelin nuclear power plant or ČEZ’s opposition to the government’s plan to sell emissions permits. A possible conflict of interests has also been cited as one of the likely reasons behind Mr. Roman’s sudden departure.

Launch of STORK gas pipeline

Photo: CTK
This week also saw the opening of the first gas pipeline between the Czech Republic and Poland. The STORK pipeline cost 700 million crowns with around half the amount covered by European Union funds. The decision to build it came at the start of 2009 when Russian gas supplies to Central and Western Europe were cut off for several weeks following a dispute between Russia and Ukraine. The new pipeline will also play a crucial role in a future north-south European pipeline linking Croatia, Hungary, Slovakia, Poland and the Czech Republic with the Baltic States. Gas will be able to flow in either direction thanks to the twin-flow capacity of the new stretch of pipeline.

Pilot issue of retail bonds

Foto: Štěpánka Budková
The Czech Finance Ministry will launch a pilot issue of retail bonds in the next two months to broaden the country's base of lenders to include Czech households. The Finance Ministry is offering 10 billion crowns worth of paper bonds in three types: one-year discounted, five-year coupon and five-year reinvesting. The yields of the pilot emission bonds will be 2 percent. People will be able to buy the bonds at branches of the ČSOB, Česká spořitelna and Komerční banka banks at one crown apiece; the minimum purchase is set at 1,000 crowns. If the project proves successful the ministry will continue with additional issues in 2012.

Future of eco-tender uncertain

The government this week announced the bids in the country’s largest ever public tender on the clean up of the country’ s most serious environmental pollution left over from the communist days. Marius Pedersen Engineering, which is part of the France-based international utilities company Veolia Environment, made the lowest bid of 56.8 billion crowns, followed by the Geosan group offering 57.8 billion crowns and Environmental Services, of the J&T investment group, offering 65.5 billion. The government had previously said that the price of bids would be the biggest single factor in selecting a winner, but there is increasing speculation that the huge tender may be scrapped and parcelled up following warnings that it presents a massive corruption risk.

Czechs increasingly sceptical regarding eurozone’s future

A poll by Media Research out this week shows that Czechs are increasingly sceptical regarding the future of the eurozone. Nearly 46 percent of respondents predicted that the current debt crisis would result in the disintegration of the monetary alliance and 84 percent of Czechs are convinced that other EU member states face similar problems as Greece, which will complicate the situation further. Two thirds of respondents expressed concern regarding the possible negative impact of the debt crisis on developments in the Czech Republic and their own standard of living. The poll also revealed scepticism regarding the Czech government´s ability to effectively solve the country’s problems. Only 21 percent of those polled said they trust the government to prevent a Greek scenario unfolding in the Czech Republic.