Czech government agrees to sell off stakes in two coal-mining companies

24-03-2004

The government of Prime Minister Vladimir Spidla has decided to undertake its first major privatisation. On Tuesday, it agreed to sell its stakes in two Czech coal-mining companies. The cabinet said that the proceeds, worth almost 5 billion crowns, will be used to cover repairs of roads and railways as well as the building of new transport infrastructure.

The cabinet decided to sell its majority stake in one of the smaller North Bohemian brown coal mining companies Sokolovska uhelna for 2.6 billion crowns to Sokolovska tezebni, which was established for this purpose by the mining company's management. Sokolovska tezebni was originally offering around two billion crowns for the government's majority stake in the mines, but eventually increased its bid by 500 million.

The other mining company to undergo privatisation is the North Moravian OKD where the government holds a 46-percent stake. It will be sold to its majority owner Karbon Invest for 2.25 billion crowns. The company increased its original bid by 800 million crowns.

In both cases, the government negotiated exclusively with these two bidders, and as Finance Minister Bohuslav Sobotka points out, this is going to be the first ever regular privatisation of mining companies in this country.

Bohuslav Sobotka, photo: CTKBohuslav Sobotka, photo: CTK "In the past, during the privatisation of OKD or other companies, the government lost its majority share in a "wild" way, without receiving any privatisation proceeds for its majority. Now when the government is going to receive over 2 billion crowns for the sell-off of its minority stake in OKD, it is historically the first money the state will get for its share in the company. It lost its majority there without getting any money."

The black coal mining company OKD has reported profits every year since 1995. It is also the largest employer in the North Moravian region, which is troubled by high unemployment.

"OKD is a key employer and I believe the government's decision will help stabilise the position of the company and increase its future competitiveness. It is vital for the North Moravian region to have such large employers, especially now when no radical solution to the unemployment situation in the region is at hand."

The government's decision to privatise OKD is not without controversy. Last December police filed charges against three principal managers of the buyer, the coal mining empire Karbon Invest. The executives allegedly signed disadvantageous contracts between OKD and Karbon Invest, by which they apparently stripped OKD of more than 1.5 billion crowns. Speaking on behalf of the government on Tuesday, Trade and Industry Minister Milan Urban said the police investigation did not have any bearing on the government's decision to sell the mining company to Karbon Invest.

24-03-2004

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