EDF loses interest in acquiring CEZ

The Czech Supreme Audit Office - which supervises spending by state bodies and institutions - has discovered that the situation was far from rosy in 2001. Irregularities and inefficiency - these are the words which best describe the situation in the public sector. This and more in this week's Economics Report.

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The French national power utility Electricite de France is no longer interested in the privatization of the Czech energy sector. The French financial daily Les Echos reported that the main reason for the decision was the excessive price which the Czech government is asking for a majority stake in the dominant Czech electricity producer CEZ and six regional power distribution companies.

The Czech government unsuccessfully tried to sell the power package in December, but none of the bidders met their strict tender conditions. The government's follow-up request for new bids from the Italian-Spanish consortium Enel-Iberdrola and France's Electricite de France also failed to bring in bids fulfilling the required conditions. In January, a Finance Ministry official said the Cabinet was negotiating with three companies interested in the privatisation deal. The three companies in question reportedly included UK's International Power, Germany's RWE and Electricite de France. However, there has also been speculation that the Trade and Industry Ministry is planning to initiate talks with RWE to buy the power package for the government's asking price of 200 billion CZK (5.5 billion US dollars).

According to the latest reports, the government will discuss merging CEZ with the regional distributors so that if the current government fails to privatise them, future governments will have limited room to make their own decision. Some media reported that this plan was initiated by CEZ itself. According to experts, such a solution would help CEZ survive on the European market.