Major Czech energy group Energetický a průmyslový holding (EPH) lost its bid to take an ownership stake in one of the Czech Republic’s biggest and most modern heat and power plants, Plzeňskáteplárenská, when a special meeting of the city council opted for a rival bid on Tuesday.
EPH, which was seeking to take a 34- percent stake in the 100-percent municipal energy company, and merge it with the city’s other heat and power company, EPH-owned Plzeňská energetika, was pitted against another offer from Czech mining company Sokolovská uhelná and energy and coal trading company Carbounion Bohemia.
Rising stakes
Plzeňská teplárenská initially called for offers to supply it with coal for 10 years following the ending of its previous contract with Sokolovská uhelná at the end of 2010. But the coal supply bids developed into a larger argument about the company’s future when EPH and then Sokolovská uhelná and Carbounion demanded they be given stakes in the municipal company.
Sokolovská uhelná and Carbounion later backed down from their demands for a share stake in Plzeňskáteplárenská, asking instead for two members on the company’s supervisory board, and this about turn and the prospect of being allowed to a keep 100 percent stake in the company appeared to win the Plzeň councilors over. They eventually voted 42:0 in favor of the Sokolovská and Carbounion offer.
‘If the criteria for this decision is the level of the price of heat and the dividend for the town, there is no expert that would judge the EPH offer as the worst one.’
EPH director Daniel Křetínský appeared in person at the council meeting to put his company’s case. “If the criteria for this decision is the level of the price of heat and the dividend for the town, there is no expert that would judge the EPH offer as the worst one. There is none,” Křetínský argued.
He added that the merger of the two city energy companies would bring substantial savings which would translate into higher dividends for the city council in the future. EPH’s offer gave guarantees on the level of future dividends from the heat plant and the possibility that they could rise.
But Křetínský also admitted that Sokolovská uhelná’s coal supply offer was very good and would not be matched in the future for other Czech heat and power companies, and he admitted that the council’s apparent intent on hanging onto a 100-percent shareholding in Plzeňskáteplárenská stacked the odds against EPH’s offer. “You wrote a tender for coal and we are offering something else. I regret that our offer is now being treated under time pressure,” he added.
Blast from the past
A clearly unhappy Křetínský also accused the city councilors of bucking industry trends by trying to keep the energy firm in municipal hands. “The trend is for most heat plants to be in private ownership in Europe.,” adding that council ownership ignored the trend over the last 20 years and was a throwback to another era.
The council vote is a rare rebuff for EPH —owned by PPF Group with a 40 percent stake, J&T also with 40 percent and Křetínský himself with 20 percent — which has in recent years has pursued an aggressive expansion in the Czech energy sector, often hand-in-hand with close partner, ČEZ.
