UPDATE 1-Czech CEZ in talks to build Moscow power plant

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Czech electricity utility CEZ has won a mandate to build a gas-fired power plant with a 600 megawatt (MW) output in the Russian capital Moscow, the state-owned company said on Tuesday.

CEZ, central Europe's biggest power group, said it expected to negotiate a deal with the Moscow government within six months on the construction of three steam-gas cycle power units with 200 MW output each.

CEZ, which has been on the acquisition trail in eastern Europe and the Balkans, would lease the land for the plant for 49 years.

"Russia and the Moscow region is particularly from the energy sector's point of view a very promising market," said Vladimir Schmalz, head of mergers and acquisitions at CEZ.

The Moscow investment is CEZ's second project in Russia.

In April it signed a deal with Unified Energy System and its unit TGK-4 to create a joint venture to refurbish old and build new power plants and allow it to participate in the Russian power sector reform.

Shares in CEZ, which hit a record 1,150 crowns in early July, gained 2 percent to 1,095 crowns by 1010 GMT. Their rise outpaced a 1.4 percent increase in the blue-chip PX index .

CEZ, the largest Czech company with a market capitalisation of $31.4 billion, has bought power plants in Poland and in Bulgaria and led talks on various other projects in the region.

[PRAGUE/Reuters/Finance.cz]