Business News

In Business News this week: the reduction in Russian oil deliveries continues, leading Czechs to look for alternatives; the Senate has passed pension and sick pay reforms; rail operator České drahy has been fined for stifling competition, and Volkswagen is considering building its Up! mini-car in Eastern Bohemia.

Reduction in Russian oil deliveries continues, Czechs negotiate alternatives

One of the week’s biggest business stories has been the continued reduction in Russian oil deliveries to the Czech Republic via the Druzhba pipeline. The pipeline, which is controlled by the Russian state-owned company Transneft, transports annually around 5.5 million tons of oil from Russia to the Czech Republic. In recent weeks, Russia has stopped sending up to 7,000 tons of oil a day. The reductions started on July 8 – the date that Condoleeza Rice and her Czech counterpart Karel Schwarzenberg signed an accord to allow Washington to base part of its anti-ballistic missile shield in the Czech Republic. Moscow has cited technical reasons for the shortfall.

This Wednesday, Czech oil importer Mero negotiated the delivery of around 250,000 tons of crude oil a month until the end of the year via the Czech-German IKL pipeline. A spokesperson for Mero said that this would fully offset the reduction in the amount of oil arriving from Russia.

Senate passes pension, sick pay reforms

Illustrative photo: Archive of Czech Radio - Radio Prague

The government’s overhaul of the country’s public services took another step forward on Thursday, when the Senate approved key pension and health insurance reforms. The pension bill will raise the age of retirement to 65 years for men and women by 2030, from around 62 and 59 now. It will also extend the minimum required working period to 35 years, from 25. The health insurance bill is aimed at cutting one of Europe’s highest absentee rates by drastically cutting sick pay for the first three days of illness. President Vaclav Klaus still has to sign the bills for them to take effect.

České drahy fined for anti-competitive practices

Czech rail operator České drahy has been fined a whopping 270 million crowns (18.6 million USD) by the national antitrust office for abusing its market dominance. The fine is one of the highest that the anti-monopoly office has ever handed out. The bureau found that České drahy had employed a number of unfair practices between 2003 and 2007 in the cargo division of its business. Its Slovak rival SPED-TRANS complained to the watchdog that the rail operator was employing a system of double pricing in a bid to encourage customer loyalty. České drahy are yet to comment upon whether they will appeal the fine.

VW considers making minicar in Škoda factory

Škoda Scout

From trains to automobiles now, and news that Volkswagen is considering building its Up! mini-car in the Czech Republic. Executives are eyeing the Škoda plant in Vrchlabí, Eastern Bohemia as one possibility. The factory, which belongs to Volkswagen’s Czech subsidiary, has just received around 89 million USD from the Czech government to improve its infrastructure, and is not currently operating at full capacity.

In related news, Škoda recorded year-on-year growth of 17.9 percent in the first half of this year, selling more than 366,000 vehicles worldwide. The fastest growth was recorded in Eastern Europe, with Russian sales rising by over 80 percent.