Czech electricity giant ČEZ has been cleared by the Czech competition watchdog to take over a key energy company on which it wants to build its ambitions for becoming a major heat supplier to the capital city Prague.
The E15 business paper reported the approval from the Office for the Protection of Competition (ÚOHS) on Thursday of the Energotrans acqusition, citing “informed sources.” The office had launched a detailed long-term probe into the deal, part of a larger asset agreement between Czech power market allies ČEZ and Energetický a Průmyslový Holding (EPH), on concerns that it could increase ČEZ’s grip of the electricity production market beyond an acceptable level.
The competition office told the paper that the probe had not been wrapped up, but echoing earlier statements from ČEZ said that a result was expected within days and at the most within a week.
The acquisition of Energotrans, which owns a 325 MW aging coal-fired power plant around 40 kilometers north of Prague and land on which ČEZ wants to build a new gas-fired power plant which could be used to deliver heat to the capital, was part of a deal under which the near 70 percent state owned power company sold its half share in German coal company MIBRAG to EPH.
According to some energy experts, the Energotrans deal would have put ČEZ on or over the 75 percent ceiling of power production on the Czech market — a percentage that is usually regarded as the point after which a company has a clear dominant position, so the ÚOHS should act to curb its market influence. The E15 article reported that the competition watchdog found that the Energotrans deal gave ČEZ a negligible increase in electricity production capacity.
No mention of any ČEZ concessions to pave the way for the Energotrans deal was made, although top managers at the energy giant has suggested that some plans, such as offloading the aged Chvaletice coal fired power plant, or the existing and planned new units at its Počerady unit, were being prepared to respond to the watchdog’s demands if need be.
As well as throwing a temporary spoke into the wider ČEZ–EPH deals, the Energotrans probe was widely taken as a test of whether the competition office would stand up to highly influential ČEZ and stand in the way of its local expansion plans. Many industry onlookers argue that ČEZ already has a dominant position on the Czech electricity market and that this has not been confronted on the ground that a wider Central European or European market should be examined when trying to work out the relevant power prism for any analysis.