CEZ Launches Czech Retail Gas Sales, Mulls Slovak Retail Offer

Czech 70% state-owned power company CEZ AS (BAACEZ.PR) this week is launching sales of natural gas to retail customers in the Czech Republic and will decide "in a matter of days" whether to launch retail gas sales in Slovakia, CEZ's head of sales Alan Svoboda said Thursday.

The company said that through 2011 it guarantees Czech retail customers a discount of at least 5% on the end price of natural gas when compared to the price offered by the Czech Republic's dominant gas importer and distributor, RWE Transgas, which is a unit of Germany's RWE AG (RWE.XE).

CEZ buys gas on regional spot markets and via medium term contracts of two and three years in duration at cheaper prices than the price paid by RWE, Svoboda said, without providing sales or pricing targets.

RWE's Czech unit is locked into long-term contracts of up to 20 years mainly with Russia's Gazprom OAO (GAZP.RS) at prices well above current market prices, he added.

Recently CEZ increased its exposure to the natural gas markets. Later this year, CEZ will launch construction of its first natural gas-fired power plant in Pocerady, north of Prague. The plant will be operational from 2013.

The Czech company also plans to build and operate several gas-fired generators in Slovakia and Hungary and has a strategic alliance with Hungarian oil and natural gas company MOL Nyrt (MOL.BU) via CEZ holding a 7% stake in MOL.

For roughly one year CEZ, previously focused only on electricity generation and sales, has sold natural gas to industrial customers in Slovakia and the Czech Republic.

-By Sean Carney, Dow Jones Newswires; [phone], [e-mail]

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