Direct sale seen for Czech coalmines

THE GOVERNMENT will embark on a direct sale of the Czech coal-mining company Sokolovská uhelňa (SU) and may do the same for Severočeské doly (SD) after abruptly cancelling the controversial tender for their privatisation.

The tender, announced last summer and formally launched in October, was shut down in early March after officials said the three bids for SD and the one for SU were all well below market price.

The privatisation of the two companies has been dogged by criticism, particularly from mine unions, over the exclusion of dominant power provider CEZ from the bidding and by claims from opposition leaders that the government was manoeuvring to favour SD suitor, the Appian Group.

The Industry and Trade Ministry quickly announced plans to negotiate a sale of SU to sole bidder Sokolovská těžební, which was established by SU management in 2002 for the purpose of taking over the mine.

Sokolovská těžební had offered Kč2.1 billion (€66 million) for SU; experts' appraisals collected by the National Property Fund set the mine's worth between Kč2.5 billion (€76 million) and Kč5.5 billion (€166 million).

Industry experts said a direct sale was more likely than a new tender. One analyst, speaking on condition of anonymity, said such a decision would favour US-based Appian, which was competing with the Slovak firm Penta and Czech-Slovak financial group J&T.

According to estimates by Česká spořitelna and the National Property Fund, the government's 55 percent stake in SD is worth at least Kč7.5 billion (€227 million). The original bids all fell short of that mark, with Appian offering Kč4.8 billilion), Penta Kč5.4 billion (€163 million) and J&T Kč6.8 billion (€205 million).

In December the interministerial commission advising the cabinet on the sale recommended that the government commence talks with J&T. Penta and Appian both subsequently sweetened their offers, although the bidding had officially closed.

J&T spokesman Petr Malek said the firm is disappointed by the government decision but would consider participating in a new tender.

The regional miners' union hailed the cancellation and renewed its call for the government to sell SD to CEZ, the country's largest coal customer, which already owns 37 percent of SD.

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