Czech Coal seeks foreign partner, sidelines CEZ

...plant, giving up on an intended alliance with power utility CEZ .

Czech Coal, privately held by a small group of shareholders, controls Mostecka Uhelna, the country's second largest lignite mining firm by output, which would supply fuel for the planned power plant.

The group is CEZ's key coal supplier, so its move to sideline CEZ and find a foreign partner for a new power source could be an obstacle to CEZ's own plan to build a 1,300 MW power station, which analysts say would represent about 9 percent of CEZ's existing capacity.

A Czech Coal spokesman said the group planned to make an announcement on its talks with a "foreign strategic partner" by the end of this month. He declined to say whether the firm was talking to E.ON , as media reports have suggested.

E.ON, the second largest Czech power supplier after CEZ with nearly one quarter of the market, has said it would like to talk to Czech Coal if the alliance with CEZ falls through.

CEZ, which is central Europe's biggest company by market capitalisation, took Czech Coal to court last month to try to ensure long-term coal deliveries.

CEZ says Czech Coal refuses to follow up on a preliminary agreement and sign a final deal on coal supplies until 2055. Czech Coal says CEZ's lawsuit was unfounded and the two firms just failed to agree on a long-term deal.

E.ON currently buys 80 percent of power from CEZ for the distribution companies it operates in the Czech Republic.