• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

CEZ to Take MUS to Court Over Long-Term Coal Supply Agreement

Posted on: Tuesday, 3 July 2007, 21:17 CDT

Czech utility CEZ is taking Mostecka Uhelna, a member of the Czech Coal Group, to court, over claims that the company is impeding the implementation of a long-term coal supply agreement that was established in 2005.

CEZ made the agreement with Mostecka Uhelna (MUS), which ensured coal supply until 2055, because of the impending electrical energy shortage in the Czech Republic. The deal was intended to extend the lives of CEZ's new and existing coal-fired power plants.

However, according to CEZ, once Czech Coal Group was acquired by a new owner, the company started to impede the implementation of the long-term agreement.

At the end of 2006, Czech Coal Group proposed replacing the supply contract with a joint venture, and CEZ looked into the possibility of the companies building two new units at CEZ's planned Pocerady power station. However, CEZ said that Czech Coal Group constantly intensified its requirements to the point that they became unacceptable.

Among the objections that CEZ had to Czech Coal Group's requests was breaking soft coal mining limits. As a result, CEZ said that it wants to revert to the initial agreement for coal supplies until 2055.

CEZ said that as Czech Coal Group refuses to keep its engagements, it is appealing to court to confirm the validity of the long-term contract for coal purchase, in order to enable the initiation of the renewal of the Pocerady plant.

However, CEZ did say that it is willing to continue negotiating about an alternative project, as long as it is under the standard operating conditions on the Czech market and under the Czech legal system.

Source: Datamonitor

More News in this Category