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Shaking out the Czech transmission & distribution industry – a study of regulatory concessions © Utility Consultants Ltd 2003 Prepared by Utility Consultants Ltd
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Disclaimer
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This research report is of a general nature, and is not intended as specific professional advice. Accordingly, neither Utility Consultants, nor its’ directors and shareholders, shall be liable for any loss or damage arising from action or inaction based on this research report. The information herein may date rapidly, but is correct at the time of writing (11 April 2003).
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Contents
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Disclaimer Contents Introduction Geographical overview Industry structure & ownership Proposed shake-out Issues arising Contact us Tell us how you liked this report
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Introduction
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The Czech Government is in the process of re-configuring the electricity industry in the build up to full privatisation This report examines a recently approved deal that is intended to strengthen the Czech industry This report also examines some of the anti-trust and subsidy issues surrounding this deal This report is intended only as a brief overview, and does not deal exhaustively with the Czech industry or with anti-trust and securities law
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Geographical overview
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Source – United States Government EIA, April 2002
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Industry structure & ownership
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Stredoceska Energetika AS (STE(STE) Vychodoceska Energetika AS (VCE) Severoceska Energetika AS (SCE) Zapadoceska Energetika AS (ZCE(ZCE) Severomoravska Energetika AS (SME) Jihimoravska Energetika AS (JME(JME) Jihoceska Energetika AS (JCE) Prazska Energetika AS (PRE(PRE) Ceske Energeticke Zavody (CEZ) Ceska Prenosova (CEPS(CEPS) Varying stakes Distribution & supply Generation & transmission
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CEZ CEPS National Property Fund (67.61%) Institutional Investors (17.40%) Custodians (11.08%) Individuals (3.91%)
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Severomoravska Energetika AS (SME) National Property Fund (48.7%) Czech Government (35%) E.On (8.5%) EdF (9.2%)
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Jihimoravska Energetika AS (JME) Municipalities (7.84%) National Property Fund (46.66%) E.On (45%) Others (0.5%)
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Jihoceska Energetika AS (JCE) Others (3.32%) – carries 33.37% voting rights National Property Fund (48.05%) E.On (13.34%) Municipalities (23.8%) – no voting rights
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Prazska Energetika AS (PRE) City of Prague (50.78%) Czech Government GesoRWE Precise details not available
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Zapadoceska Energetika AS (ZCE) Czech Government (52%) E.On (48%)
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Severoceska Energetika AS (SCE) Municipalities (5.85%) National Property Fund (48.04%) Private investors (28.09%) Other (17.13%)
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Stredoceska Energetika AS (STE) Czech Government (65%) RWE (35%)
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Vychodoceska Energetika AS (VCE) Czech Government (58%) E.On (42%)
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VCE PRE JME JCE ZCE SCE STE SME
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Proposed shake-out
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Broad objectives Strengthen market position as the EU industry consolidates Retain as much embedded value as possible for privatisation
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Initially proposed re-shuffle Implicit concession that 66% of CEPS would be transferred to the Czech government would sell its stakes in STE, VCE, SCE, ZCE and SME
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Initial concessions imposed by UOHS CEZ must sell its minority stakes in JME, JCE and PRE All of CEPS must be sold (not just the 66% that was to be sold to the Govt.) CEZ must on-sell 100% of any one of the other five
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Additional concessions imposed by UOHS CEZ must on-sell stakes in 4 of the 8 companies within 1 year
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Issues arising
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Issues arising Relative valuations of assets to be swapped may have represented a hidden subsidy Creation of market dominance Possible breach of securities law due to timing of media releases
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Initially proposed deal (with implicit concessions) Initial concessions imposed by UOHS Appeal against initial concessions By CEZ Additional concessions imposed by UOHS Appeal against additional concessions by CEZ Investigation of hidden subsidy by UOHS Refusal by Czech government to re-value assets UOHS accepts government’s stance Investigation by SEC of possible securities law breach CEZ announces intention to defend accusation Appeal rejected
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Tell us how you liked this report
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Hi … I’m Phil Caffyn from Utility Consultants. I’d really like your feedback on this report, so please pick one of the buttons below… ExcellentVery good GoodAverage
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Contact us
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Phone us on +64-7-8546541 Pick here to ask questions Pick here to receive our free newsletter Pick here to visit our website
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