Row looming between EU and Czech Republic over coal mine sale

Photo: Lysippos, Creative Commons 3.0

A sharp conflict is looming between the Czech Republic and the European Commission. The Commission does not like the way the Czech government has been conducting a public tender for the privatisation of the Severoceske doly and Sokolovska uhelna coal mining companies. The Commission sees the tender conditions as seriously discriminatory and says it suspects covert state aid.

Photo: Lysippos, Creative Commons 3.0
A source from the European Commission told CTK news agency that there has been growing concern over the developments around the sale and that the Commission has not yet received any reply to its recent inquiry addressed to Prague.

In its letter, the Commission protested against "gross discrimination" of companies from the Czech Republic's neighbouring countries - EU members - that were barred from the competition. The Commission described this approach as incompatible with competition and public tender rules. Strong players from both the Czech Republic and EU member states, such as British International Power and Luxembourg's Impower Finance, were excluded from the tender in the pre-qualification round. The reasons given were usually of a formal, technical nature.

The Deputy Minister of Industry and Trade Martin Pecina explained that the conditions were set so as to allow only mining companies to bid for the mines, not those who might seek their closure - that is companies from neighbouring countries or those that trade in other types of energy, such as crude oil.

The government would like to see the new owners extract all the coal that can economically be extracted, meaning that they will operate the mines for another 60 to 80 years. Tens of thousands of people and whole regions depend on these companies, so the aim is to leave nothing to the chance and provide for all potential risks. Another reason was to ensure self-sustainability of the country in power generation and to prevent dependence on foreign sources.

Brussels says it understands the reasons but claims it was possible to protect the Czech interests in a more transparent way, without violating competition rules.