ČEZ split looking unlikely as ministers oppose idea

Photo: Filip Jandourek

When company bosses take a step back from a project they have initiated and backed you might well suspect that it’s going to hit the wall or be kicked into the thick grass, to mix a few metaphors.

Photo: Filip Jandourek
And that’s what the bosses of Czech power giant ČEZ more or less did this week with a disclaimer in their annual results report stating that the company board has so far not taken a stand on whether the company should back the split or not.

It was though of course ČEZ bosses themselves that came up with the initial idea of the split as a way of getting round the problem of building new nuclear reactors when minority shareholders are opposed to the idea if government support, as seems likely, is inadequate and the whole project looks like a risky jump in the dark.

The bosses have since insisted that there are sound reasons in any case for splitting off coal fired and nuclear power production from the rest of the company; that’s to say renewables, energy services, distribution, and energy trading.

Big energy companies in Germany have gone down the same route and others, such as France’s EDF, are contemplating the same route as well, ČEZ bosses say.

Apart from the results disclaimer there are other signs that the big split is likely to be a no go as well. ANO leader Andrej Babiš has always blown pretty cool on the move, usually maintaining that ČEZ has the wherewithal to finance new nuclear reactors itself. And last week he warned that the state should maintain controlling stakes in some of the spun off divisions, such as distribution and energy trading, though not detailing what these share stakes would be.

On Friday, Minister of Industry and Trade, Tomáš Hüner, entered the fray with an interview with business daily Hospodářske Noviny in which he denounced the split as stupid. He added as well that it seemed to make little sense that distribution, one of ČEZ’s most profitable areas and a steady earner for the company, should be separated from coal and nuclear production. And he admitted puzzlement why ČEZ bosses now were taken up so much with the concept of transformation.

Dukovany nuclear power plant,  photo: Michal Malý
The ministry’s working committee responsible for plotting nuclear development on March 26 is expected to deal with the issue of management and financing of new reactors. But according to the current affairs magazine Respekt, it is not likely to take a stand on the ČEZ split but still leaves the door open to various options. And that, the magazine says, suit the politicians quite well for the moment.

In theory, the Czech government is committed to building new nuclear reactors with priority for one at the Dukovany site, where current units are likely to be phased out from 2035, and another later at Temelin. A recent survey by market operator, OTE, summed up the scenario fairly starkly saying that Czechs will simply not be able to meet their climate change targets to cut carbon emissions without more nuclear reactors. And under one scenario, that survey counts on even more new nuclear reactors than either ČEZ or the Czech government have counted on so far.