CEZ May Bid for Stakes in Polish Companies, CEO Roman Says

By Andrea Dudikova

Sept. 22 (Bloomberg) -- CEZ AS, the largest Czech utility, may bid for stakes in mining, power production or distribution companies in Poland, where the process of selling state assets is starting, Chief Executive Officer Martin Roman said.

Poland is an attractive country where CEZ will ``carefully'' watch for opportunities as the utility can assist Polish companies with capital and increase their effectiveness, Roman, 38, said in a Prague interview on Sept. 19.

The government in Poland, the largest former communist country to join the European Union, wants to sell stakes in electricity generators, mining and distribution companies to raise capital in response to rising demand for power in the country of 38.6 million. Power consumption will likely grow at least 3 percent annually in coming years, while larger cities like Warsaw may demand 10 percent more electricity each year.

``A minority stake is probably not something that would be in the epicenter of our interest,'' he said. ``We're reading the information today that it should take place in two parts, a part through the bourse and then to a strategic partner. So the second step will be a whole lot more interesting to us.''

Polish power producers including Enea SA and Polska Grupa Energetyczna SA are seeking funding to help finance total investment of 135 billion zloty ($60 billion) through 2030. Coal miners Lubelski Wegiel Bogdanka SA and Katowicki Holding Weglowy SA plan to sell shares and increase output, to respond to the growing demand for the main fuel for electricity production in Poland. Roman would not comment on individual companies.

Nuclear Power

The utility, which operates two nuclear power plants in the Czech Republic, aims to add more reactors in the country and is also considering bidding for such projects in other countries.

Roman, who considers nuclear sources to be ``by far the best means'' of power production, said first electricity from new reactors at Temelin may be produced as early as 2018.

Still, the construction must first be approved by the government, a move likely to be made by the Cabinet that will replace Prime Minister Mirek Topolanek's coalition. The current Cabinet, scheduled to be in office through 2010, has agreed not to expand nuclear power during its term.

The decision regarding expanding nuclear reactors ``will be one of the most important'' for the new government, Roman said. Before the political decision is made, a tender for a supplier of the new reactors needs to be held, he said.

Reactor Construction

``I think that 2010 is ambitious but not an unreal goal'' to hold the tender, he said, adding the process of selecting a supplier will probably take more than a year.

If Slovakia invites offers to build new reactors in that country, CEZ will ``very probably'' participate, he said. ``If the conditions will be acceptable for us, then we will be interested to bid.''

CEZ is also looking at expansion possibilities in the Balkans, including Serbia, Turkey, and even in countries beyond the region of its current operations, such as Vietnam and Kazakhstan, he said.

The 19 percent drop in CEZ shares so far this year is due to the crisis in the financial sector around the world which has spilled over to other, non-related companies, Roman said.

``CEZ's financial outlook for the next five years is the same, nothing has changed,'' he said.

The market turmoil and expectations that it may contribute to a further economic slowdown around the world should have no impact on demand for power produced by CEZ, Roman said.

The utility may start with a new share buyback program toward the ``very end of the year,'' he said.

To contact the reporter on this story: Andrea Dudikova in Prague at adudikova@bloomberg.net