CEZ Group exploring sale of business in Bulgaria

CEZ logo

CEZ Distribution and CEZ Electro, the CEZ Group distribution and electricity trader in Bulgaria, respectively, may be put on sale. According to a statement published on Friday, based on interested from several investors CEZ Group has decided to examine the market related to its equity investments in Bulgaria. No other details on the potential candidates or a timeframe of the examination were provided. CEZ Group owns 67% of CEZ Distribution and CEZ Electro as well as Varna thermal power plant with installed capacity of 1,260 MWh.

Rumors on CEZ potential buyers

Yet, local media reports, 4 to 5 investors have shown nonbinding interests in CEZ’ assets in Bulgaria. These include local business people like Atanas and Plamen Bobokov, owners of Prista Oil Group and Monbat (5MB BU,) and Nikolay Valkanov, owner and Chairman of Minstroy Holding. Local media added that the other electricity distribution players on the market – EVN and Energo- Pro, may also be interested in CEZ’ assets as well as Russian and Chinese companies.

International arbitration in progress

In July 2016, CEZ Group said it has filed a request for international arbitration worth hundreds of millions of euro against Bulgaria over its failure to observe the investment protection provisions of the Energy Charter Treaty. The group said at the time, quoted by SEE News, that the situation in the Bulgarian energy sector was critical and “especially the pricing decisions of the local regulator have not been, on a long-term basis, in line with the expectations at the time of the privatization process.”

Privatisation background

CEZ won the tender for electricity distribution and trading in Western Bulgaria back in 2004 with an offer of EUR 281.5 mln. The company provides service to 3 mln. consumers.

CEZ shares and SOFIX in the last 12 months, source BSE

CEZ shares and SOFIX in the last 12 months, source BSE

CEZ shares open on the upside

On Monday, 30 January, CEZ shares opened on the Bulgarian Stock exchange on the upside and went up approx. 10% in the first hour of trading.

Check ELANA Trading equity reports