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Opinion
March 2, 2018 www.intellinews.com I Page 25
CEZ Republic no more as Czech utility faces major shake-up
Nicholas Watson in Prague
It promises to be a crucial six months for the Czech Republic’s nuclear industry as a model for building and financing a new nuclear reactor at the Dukovany power plant takes shape.
According to Jan Stuller, special envoy for nu- clear energy at the Czech Ministry of Industry and Trade, his nuclear energy committee is working towards putting together an agreement over the investment model for building the reactor by the end of March, beginning of April.
There are three options on the table: the reactor’s construction is done through subsidiaries of the 70% state-owned CEZ with some form of state guarantee; by the state buying those subsidiaries; or by CEZ once the state has squeezed out minor- ity shareholders.
A key part of this is whether or how CEZ will be restructured. Ladislav Kríž, spokesman for CEZ, has confirmed to bne IntelliNews that a transfor- mation study was prepared last year by a team of internal strategists, external lawyers, consulting companies and investment bankers. From this, the preferred option of CEZ’s management in any company shakeup would be to spin off the utility’s distribution, renewable energy, small-customer sales and energy services into a new company (CEZ ESCO) and to sell 49% of that entity to inves- tors, while the state would take control of 100%
of the remaining nuclear, coal, natural gas and hydroelectric assets, as well as coal mining and energy trading.
CEZ's existing nuclear power plant at Dukovany.
Splitting up CEZ, Central and Eastern Europe’s largest utility with a market capitalisation of around €11bn, would be a major shakeup of the business and political scene of a country that has sometimes been referred to over the years as CEZ Republic.
On February 7, Babis said the Czech government would appoint an expert team to assess a propos- al to split the majority state-owned CEZ, though he does not appear to support the idea – in public at least – and is still insisting that CEZ should fi- nance the building of any new reactors on its own without any state guarantees, hard or soft.
Few believe this is feasible, however, given CEZ’s stretched balance sheet and the difference be- tween CEZ’s borrowing rates and the govern- ment’s being about 9% versus 3%. CEZ’s minority shareholders, who hold 30% of the shares, are also against new nuclear projects and could file a lawsuit arguing that Dukovany would destroy shareholder value.
“There is a vast consensus on building new nuclear resources... but financing is one topic where we do not have a consensus,” Stuller tells bne IntelliNews. “In November I would love to see the answer to three questions: the investment model, the financ- ing model and how we should select the supplier.”
At the same time, the Czech government is cur- rently working on providing further answers for the European Commission over its request to get