Czech Gov't Weighs CEZ Split: Nuclear vs Non-Nuclear
The Czech government is contemplating two strategies to divide energy behemoth CEZ into nuclear and non-nuclear segments, mirroring the approach of German RWE-Innogy. This maneuver seeks to attract diverse investors and potentially reduce the company's aggregate cost of capital.
The initial plan involves the government assuming full control of nuclear assets, encompassing the nascent nuclear project, and owning 51% of the residual assets. This would modestly enhance minority shareholders' profits to CZK 17.5 billion ($7.7 million USD). Nevertheless, it would also almost double the carbon intensity of the non-nuclear entity to 0.8 tons per MWh.
The alternative scenario has the state-owned entity overseeing nuclear, conventional, and hydro generation, while a subsidiary owns grid, sales, energy efficiency services, and renewables. Minority investors would possess 49% of this subsidiary. This option could decrease minority shareholders' earnings to CZK 14.5 billion ($6.4 million USD) but exposes the company to fewer commodity risks, with the majority of generation assets being carbon-free renewables and regulated power distribution.
The government is evaluating these options to cleave CEZ, with the possibility of minority involvement in the new subsidiary. The ultimate decision will influence both the company's carbon intensity and minority shareholders' earnings.
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