News that Prague-listed utility ČEZ will sell one or two coal-burning power plants with a capacity of 800–1,000 MW in a bid to end a European Commission probe into suspected anti-competitive behavior (and in line with plans to divest from carbon-emitting power generation capacity) has been welcomed by the markets. State-controlled ČEZ — which denies any wrongdoing — had faced a fine of up to 10 percent of its 2008 global turnover of $5.2 billion.
Chunks of a Ministry of Environment–piloted bid to reward Czech power companies, primarily state-controlled ČEZ, with free carbon emissions allowances in return for investments in cleaner electricity production have been rejected by Brussels officials with another problem stemming from concerns that Czech bid will excessively boost ČEZ’s market position.
Czech Prime Minister Petr Nečas (Civic Democrats, ODS) gave a brutal warning that the country’s budget deficit could jump to a staggering 6.0 percent of GDP if the billions of euros in payments from EU funding for programs now frozen — due to doubts in Brussels about how the money has been used and accounted for by the Czechs — are not cleared up.
The Ministry of Industry has lodged a proposal for a new oil or oil products tax to help boost the country’s strategic reserves to 120 days from 90 days. New EU legislation demands countries stock specific oil products as well as oil and tighten up the oil storage rules with an end year deadline for measures to be taken.
A long-running legal battle between Czech ministries and the European Commission over high agricultural goods surpluses run up by the country before joining the EU has resulted in a court victory for Prague. The Czech Republic can now seek the return of the €12.287 billion fine which has already been paid.
With billions of crowns in EU funding frozen, the Czech government is finally taking action. Finance Minister Miroslav Kalousek (TOP 09) is planning to gather all the auditors responsible for controlling EU grant expenditure from various regions and regional bodies into a single unit within his ministry. According to a number of sources, however, the Finance Ministry holds its fair share of responsibility for misuse of EU funds and flawed surveillance.
The spotlight has been put on serious European Commission reservations over Czech supervision of the way its funding is spent and administered as the Finance Ministry says it will not be seeking reimbursement of cash for two key structural fund programs until June. By then, Prague hopes to have satisfied Brussels with stepped up supervision which will deflect a much more damaging funding freeze.
Prime Minister Petr Nečas says cabinet ministers in the three-part coalition government have given him a mandate not to sign the EU’s new budgetary discipline treaty at the EU summit in Brussels on Thursday and Friday. Nečas admits, however, that the cabinet remains divided over the treaty while again stressing that the Czech Republic could always on to sign on to it later.
Deputy Interior Minister Radek Šmerda announced Monday that internal audits and investigations launched last summer have revealed that in the past “dozens of millions of crowns” of EU funds were misspent or even embezzled. He added that the ministry has already responded by filing four criminal complaints with the police and more may follow.
A tender to build the new track between Rokycany and Plzeň in western Bohemia is being billed as the largest rail infrastructure project in 20 years. Originally forecast to cost around Kč 10 billion, the Railway Infrastructure Administration (SŽDC) says it now expects offers even lower than Kč 7.5 billion. The new track will, however, only cut the journey time between Prague and Plzeň by six minutes.