WRITTEN QUESTION P-3639/01

by Daniela Raschhofer (NI) to the Commission

(8 January 2002)

Subject: Privatisation of the energy industry in the Czech Republic

In the Czech Republic, there are plans for selling the State's shares in the energy industry. These comprise a 67 % share in the energy supplier CEZ and majority holdings in six further Czech distribution companies.

There are a number of striking features to these privatisation plans in the Czech energy industry: it is intended to sell all the above shares to a single investor, who, as a vertically integrated undertaking, would then hold more than 80 % of the Czech electricity market. Moreover, by acquiring a wholly-owned subsidiary of CEZ CEP the new market leader would gain complete control over the Czech transmission network.

The Czech Government is attaching highly questionable conditions to the sale itself. Until 2010, parts of the total share package may be sold only with the consent of the Czech Government. Until 2015, the new owner is to be compelled to export massive amounts of electricity, to buy some 27 million tons of Czech lignite per annum, and to fully operate the Dukovany and Temelin nuclear power plants.

Irregularities and breaches of the law are also said to have occurred in connection with the invitation to tender and in the selection of the privatisation adviser.

What is the Commission's view of the export and compulsory purchase requirements which the Czech Government intends to impose, in the light of the common position on the energy chapter, in which the Czech Republic is called upon not to conclude any long-term agreements on taking delivery of products?

Does the Commission see any contradiction between the monopoly which the new owner is expected to acquire as a result of the sale including a monopoly on control of the transmission network and the principles concerning liberalisation of the energy market and the opening-up of the energy market pledged by the Czech Republic in the common position on the energy chapter?

Has the tender procedure complied with all the criteria laid down in EU law?

Answer given by Mr Verheugen on behalf of the Commission

(7 February 2002)

The Commission is monitoring developments in the energy sector of the Czech Republic with particular reference to the competition policy obligations of the Czech Republic under the Europe Agreement and in the framework of the accession negotiations.

Furthermore, the Commission has received several comments and complaints regarding the privatisation of the Czech electricity market.

In order to allow the Commission to make a proper analysis of the competition dimension of this privatisation, we have, as a first step, contacted the Office for the Protection of Competition of the Czech Republic, which is responsible for enforcement of the competition rules, to obtain its assessment of the case and to ascertain what steps have been taken.

The Commission is not fully informed of the conditions attached to this privatisation. However, it should be recalled that the Commission does request to candidate countries to remain cautious with respect to stranded costs in entering into any new long term commitments.

As regards the transmission network, the Czech Transmission operator is currently an independent legal entity and is thus compatible with the current acquis, Directive 96/92/EC of the Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity(1). The Commission's proposal(2) to amend the relevant Directive foresees criteria for ensuring the independence of the transmission operator.

As regards the tendering procedure, the Czech Republic is required to align with Union public procurement rules by the time of accession but has not yet done so. This delay was criticised in the Commission's 2001 Regular Report(3) which called upon the Czech authorities to ensure clarity and predictability in this field, including necessary legislative amendments strictly limiting the use of fast-track procedures to emergency situations and excluding the possibility of arbitrary government decisions.

(1) OJ L 27, 30.1.1997.

(2) OJ C 240 E, 28.8.2001.

(3) COM(2001) 700 final.