ECONOMY

CEZ foot in Eastern Europe

SOFIA (Reuters) – Czech utility CEZ said yesterday it was in closing talks for deals worth hundreds of millions of euros in Bulgaria and Ukraine that would expand its reach in Eastern Europe. Head of mergers and acquisitions Vladimir Schmalz said CEZ had sweetened an initial offer to buy Bulgaria’s second-largest coal-fired power plant and can seal a deal next month. CEZ started talks to acquire the 1,260-megawatt Varna plant, for which it placed a second-best offer of 285.2 million euros last year, after top bidder Unified Energy System (UES), from Russia, abandoned the sale. «The talks are coming to an end… We are able to close them before the set deadline. I guess in April,» Schmalz told reporters. He refused to comment on how CEZ had improved its offer, but said: «The parameters of the deal will be improved… The contract will be much more favorable for Bulgaria.» State-owned CEZ already owns three power distributors in Bulgaria and is also interested in taking a stake in the planned 2,000-megawatt Belene nuclear power plant, which Bulgaria aims to bring online in 2011. Armed with a 3-billion-euro warchest, CEZ is vying to buy power distributors in the Former Yugoslav Republic of Macedonia and Romania and Schmalz said it was hungry for other opportunities in ex-communist Europe. He said CEZ had also entered the final stage of talks with VS Energy, a Russian-owned, Dutch-registered firm, over a majority stake in up to six power distributors in Ukraine. «These talks are in their final stage. We are discussing the final details. We are optimistic we can close a deal. We are talking about several hundred million euros,» he said. CEZ has also signed a contract with Bosnia’s state-owned utility Elektroprivreda to build at least two coal-fired plants and purchase coal mines in a long-term deal that could exceed 1.5 billion euros in value. «Maybe you have noticed that the plant was not operational during the winter,» he said. Separately, Austrian utility EVN yesterday outbid CEZ in the privatization of ESM, power distributor of the Former Yugoslav Republic of Macedonia, by offering 225 million euros, against 181 million.