Business News

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In this week’s business news: companies from industries with a high demand for technologies fuel Czech GDP growth; energy regulator predicts electricity price hike; foreign explorers to look into if Czechs have shale gas; Bahrain no longer offshore option for Czechs; modernized railway line fails to provide a faster connection to Germany; and Czech Railways post a modest profit for the first quarter of 2011.

Technology demanding industries post fastest revenue growth

Czech firms in the most technology-demanding industries posted the fastest revenue growth in 2010, according to government figures released on Thursday. Their revenues grew by 20 percent last year, amounting to 12.6 percent of total revenues of the country’s manufacturing industry. Czech Industry and Trade Minister Martin Kocourek said the industry’s boom, along with a higher foreign trade turnover, were the major factors behind the country’s GDP growth of 2.2 percent last year. Mr Kocourek also noted that productivity grew faster than salaries last year.

Energy regulator predicts hike in next year’s electricity prices

The Czech Republic’s energy regulator this week came up with its first own estimate of next year’s electricity price hikes. Deputy chair of the Energy Regulatory Office, Blahoslav Němeček said he expected the cost of electricity for households to rise by between 3.6 and 6 percent next year, while those for companies should see an increase of 6 to 8.8 percent. However, several other factors will affect the actual cost increase, namely the amount of Czech state subsidies as well as Germany’s nuclear power policy. In fact, some analysts predicted that in 2012, electricity prices might go up by as much as 10 percent.

Foreign companies looking to explore Czech shale gas reserves

The news that potentially vast reserves of unconventional shale gas were discovered in a number of European countries sparked the interest of several international firms who are setting out to find out whether the Czech Republic could also be sitting on any supplies of the gas. The daily Lidové noviny reported on Friday that the Czech Environment Ministry has received requests from three firms for licences to explore shale gas and oil reserves in the country, most recently from the Australian-based firm BasGas which would like to drill in northern Bohemia. Any large gas reserves could significantly diminish the country’s dependence on foreign supplies, mostly from Russia. However, many Czech experts remain sceptical and claim that for many years to come, shale gas extraction will be a purely academic matter.

Bahrain no longer offshore haven for Czechs

The Gulf state of Bahrain is no longer an option for Czech firms looking to protect their fortunes from tax burdens back home. Czech Finance Minister Miroslav Kalousek and his Bahraini counterpart, Sheik Ahmed bin Mohammed Al Khalifa, on Tuesday signed an agreement to prevent tax evasion and double taxation. The two countries will exchange information on tax payers registered in their countries. A spokesman for the Czech Finance Ministry said Bahrain was becoming attractive for Czech investors, particularly in the fields of transport infrastructure, electrical engineering and textiles.

Government spends billions on renovation of wrong railway track

The Czech government has spent around ten billion crowns, or more than 577 million US dollars, on the modernization of the Plzeň – Cheb railway corridor in western Bohemia that was supposed to provide a faster connection with Germany. The reconstruction took four years to complete but, as the daily Lidové noviny reported on Thursday, anyone travelling to Germany has to transfer at the border and continue on a slow, local train. The reason for this is that on the German side, another railway line is in fact being modernized which connects to the Czech network some 100 km further south, near Domažlice in southern Bohemia. A spokesman for the Czech Transport Ministry said the money was well spent regardless of the missing connection. Authorities are planning to modernize the southern, Munich bound line as well – the project should be finished by 2024.

Czech Railways post modest profit for Q1

The state-owned Czech Railways on Wednesday posted a profit of six million crowns, or nearly 350,000 US dollars, for the first quarter of this year. Czech Railways CEO Petr Žaluda said that the firm managed to make up for higher prices fuel and electricity by lowering its administrative and personnel expenses. The biggest revenue increase was registered in passenger transportation, where Czech Railways cashed in 85 million crowns more than in the same period last year.