INTERVIEW-Czech CEZ sees growth opportunities, eyes Turkey

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Czech power firm CEZ will continue its march to expand in central and eastern Europe and is setting its sights on Turkey, the firm's mergers and acquisitions chief said on Tuesday.

Vladimir Schmalz told Reuters the majority state-owned company and Europe's second-largest power exporter was eyeing a number of potential acquisition and growth opportunities in south-eastern Europe, Poland, Russia and Ukraine.

"CEZ has sufficient resources to further participate in the coming years in the consolidation of energy assets in central and eastern Europe," Schmalz told Reuters in an interview.

CEZ, the biggest Czech company, with market capitalisation of $28 billion, has acquired power plants and distribution networks in Romania, Bulgaria and Poland, and Schmalz said he expected more deals next year.

"I am strongly convinced that next year we will succeed in either one of the privatisation processes or one of the privately negotiated transactions," Schmalz said.

He said CEZ was looking for a local partner in Turkey, where it may enter bidding to build two 1,200 megawatt coal-power units in Asfin-Elbistan.

The cost is expected at $4-5 billion, and the winner would get the rights to operate the plants for 30 years, according to Turkish officials.

"Construction of new sources in Turkey certainly interests us, and so far everything is heading toward us expressing interest," he said.

"We would certainly be interested in cooperating with some local Turkish partner who knows local conditions ... Now we are at the stage of selecting the local partner, because we do not feel like going there alone," he said.

The deadline for declaring interest in the Turkish project is Jan. 23, he said.

He added CEZ was looking at building a new unit at the Halemba power station in Poland, together with Poland's PKE. The deadline for bids to build the up to 440 megawatt unit is Dec. 29.

Schmalz said CEZ would study Russia, where he said new opportunities were emerging.

"During 2007, we will continue in looking for tips for opportunities where CEZ may invest," he said.

CEZ has said earlier it was mulling building a gas-powered power station in Russia.

CEZ has been locked in talks to buy six power distribution companies in the Ukraine, and has said it expected the deal would be done by the end of this year.

Schmalz had no comment on the talks.

But he added that there may be also other opportunities in the Ukraine, given that the Ukrainian government has approved a list of assets to be privatised, which included energy assets.

Schmalz said that given the limited number of possible acquisitions, building new capacity was the way to expand in south-eastern Europe.

CEZ has formed a joint venture that will invest about 1.5 billion euros into building a new power station and developing a mine in Bosnia, and has shown interest in building a power plant and developing mines in Kosovo.

Schmalz said further opportunities in Bosnia, where CEZ is short-listed to build two power station units, and Serbia, seemed to be on the back burner due to elections.

[PRAGUE/Reuters/Finance.cz]