The Czech Republic’s biggest energy company and one of the few major firms still in state hands, ČEZ, could be facing a structural earthquake.
News agency Reuters has reported that the government has instructed company bosses to plot out the details of a scenario under which the near 70 percent state controlled company would hive off its distribution and renewables assets and sell them.
The coal and nuclear generation activities would remain as the core activities of the new look ČEZ.
That and other restructuring scenarios have already been raised in the past, what’s new is the apparent new impetus for it from top government leaders. ČEZ has preferred not to comment directly.
The target of the selected sale, which might earn around 100 billion crowns, would be to free up cash for further construction of nuclear power plants. The Ministry of Trade and Industry, which has main responsibility for energy policy, is seeking to push ahead with construction of at least one new reactor at ČEZ’s Dukovany and another follow up one at Temelín.
And time is pressing. The four units at Dukovany could begin to be phased out from 2035 onwards and that, according to the government’s nominee to push ahead with new nuclear capacity, Jan Stuller, warning that a decision on how to finance new reactors and who should build them needs to be taken at the beginning of 2018.
The government has looked at a scenario where the state would buy out ČEZ’s nuclear assets and companies preparing for new reactors as another option to push ahead with construction. ČEZ’s could, on the other hand, be told to push ahead with the projects itself although it previously baulked at that prospect when it cancelled preparations for two new reactors at Temelín.
Most analysts have reacted negatively to the report of the government instruction, though, of course, anything coming out of the current government could be overturned by a new one following parliamentary elections at the end of October.
They note that Czech coal is being squeezed by climate change restrictions and the exhaustion of reserves and that renewables on their own are not an answer to a looming energy shortfall in the country. Therefore, they say that the argument about who will build and finance the new nuclear reactors will not go away and, with time, will become ever more pressing.
Energy distribution assets used to be regarded as unfashionable but their stead earnings and reliability in times of low interest rates have earned them new favour over the last decade. ČEZ is the biggest regional electricity distribution company in the country.