UPDATE 1-Czech FinMin to propose govt sells 7 pct of CEZ

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PRAGUE, March 15 (Reuters) - The Czech Finance Ministry will recommend, probably at Monday's Cabinet meeting, that the government sells a 7 percent stake in power utility CEZ on the stock exchange, a spokesman said on Thursday.

Finance ministry spokesman Ondrej Jakob said the Cabinet might be considering other options which he declined to specify.

CEZ shares fell 2.3 percent on Wednesday after news that the government is planning to proceed with a sale of the 7 percent stake, worth $1.6 billion at current market prices.

The state holds 67.61 percent of CEZ and has no plan to give up majority control over the country's most profitable company and central Europe's biggest electricity producer and distributor in the near future.

The daily Mlada fronta Dnes quoted on Thursday a ministry's document as recommending the cabinet consider selling either only 0.91 percent of CEZ shares or as much as 15 percent, which would still enable the government to retain a 51 percent stake.

The daily said that both selling 7 percent and up to 15 percent would deprive the government of its two-thirds majority in CEZ, which gives it absolute control over the company, enabling it to freely change its statutes or equity capital.

But Jakob said the finance minister would recommend selling only 7 percent.

"It is likely that the plan to sell part of the state's stake in CEZ will be on the agenda of a cabinet meeting on Monday," he said. "I expect the finance minister to propose selling 7 percent of shares in CEZ on the bourse."

The cash-strapped government has spoken for months about cutting its CEZ stake to find 31 billion crowns ($1.5 billion) to pay for road construction without inflating an already bloated budget deficit.

The Mlada fronta Dnes also quoted Industry Minister Martin Riman as saying the government needs an extra 31 billion crowns, and that it may sell less than 7 percent if the price is high enough to bring the desired revenue.