Research (Investicniweb.cz)
Czech markets  |  May 30, 2011 17:34:39

Martin Smith (CEZ): The rise of electricity prices are playing into the hands (30/05/2011)



With Martin Novak, CFO of CEZ, we are talking exclusively about the opportunities in particular companies, acquisitions and future plans. Energy giant first play into the hands of a temporary shutdown of German nuclear power plants, because with the rise of electricity prices into long-term contracts. This weekend even the Germans announced the very end of the production of electricity from nuclear in 2022. Much discussed withholding tax return, although longer solar projects, but it certainly does not significantly endanger.

As you look at the cost of financing the construction of Temelin? The expected rise in interest rates is positive.

Martin Smith (MN): The Temelin funding responsibly prepare so we were able to finance the balance of CEZ, as was the case in the first two building blocks. Funding is not yet the most recent issue, the parameters (the technology and for how much) to determine the completion of the tender.We certainly have the means, just for comparison, we intend to invest in 2015 to spend 300 billion crowns. In recent years we issue bonds with long duration, ie 10.12, 15 and 30 years. Most of them will therefore be payable until the completion of Temelin horizon.

CEZ plans to somehow accelerate its debt program that those debts had taken much longer now?

MN: As I said, we issue both bonds with long maturities, and also provide interest rates on future bonds now. Thus we are able to fix the interest expense without that we would have to issue bonds at a time when we need more funding. We can assume that in the construction of Temelin will not use debt, but mostly their own operating cash flow, which is in the tens of billions of crowns annually.

It is difficult to estimate, but you have an opinion on how to change the cost of Plant due to safety measures (EU requirements)?

MN:Nuclear energy works on the exchange of information and learning from the crisis. The whole course of crash in Japan and analyze the resulting recommendations for other operators of nuclear power plants. It will of course want to have incorporated, safety is our priority. As to the cost and impact of projects on the economy, it brings us to the level of speculative, yet because there is nothing to count. In the tender we have also not yet reached the stage of submission of tenders, so that we can relate to something. The parties can hear some opinions that would in turn projects should decrease due to the demand for cheaper. I think at this point can not be clearly answered.

What is your view on the efficiency of its solar projects in the solar tax credit? CEZ bought the relatively expensive. What is the overall balance of CEZ from these projects? Due to tighter regulation is already in the solar integration will not invest now so someone CEZ will be able to use more of its coal resources.

MN:CEZ bought ready-made and fully authorized projects for which it was clear that arise. Moreover, bought at a price that ensured the return of projects. The introduction of a withholding tax of course, also affected the economy of projects CEZ. As the first fast and simple calculations, as well as detailed calculations have confirmed to us that the introduction of withholding tax for three years longer, while return on solar projects, but it certainly does not significantly endanger. This was according to information from the press intent of the Act when it was adopted.

As regards the second part of the query at the end of the year added more than 2,000 MW of installed capacity in solar and wind power. Distributors buy their production.

As Martin Smith looks at acquisition opportunities, and what he thinks will affect CEZ's share price? Continuation of the interview HERE:


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Martin Novák (ČEZ): Vzestup cen elektřiny nám hraje do karet (30.5.2011)

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