RPT-Czech govt approves sale of part of CEZ stake

(Repeats story published late on Monday)

KOLODEJE, Czech Republic, Sept 25 (Reuters) - The Czech government approved a plan on Monday to sell part of the state's stake in power utility CEZ <CEZPsp.PR> next year to plug a hole in the state budget, Finance Minister Vlastimil Tlusty said.

Tlusty said the government would sell shares to a volume of 31 billion Czech crowns ($1.40 billion), which would be around 6 to 7 percent of the firm given its current share price.

The sale would be smaller than previously thought. Tlusty had said he was looking to privatise around 16 percent of CEZ, Europe's second largest power exporter.

The state budget proposal has a planned deficit of 119 billion crowns for next year. The government was still debating the budget draft and had not approved it by 1430 GMT.

"The government has agreed to start the sale of part of CEZ with a maximum yield of 31 billion crowns," he told journalists during a break in the meeting. The funds would be used for transport infrastructure and to pay for environmental damages.

The state holds 68 percent of CEZ and Tlusty said the sale of the shares was unlikely until 2007 and would be gradual and through the market in order to avoid flooding it and causing a price slump.

However, the government lacks a parliamentary majority and will likely lose a confidence vote due by Oct. 4. The opposition Social Democrats have said they are against the sale of the CEZ stake.

"This sale is also risky from the point of view of price and the quality of investor," Social Democrat chief Jiri Paroubek said earlier on Monday.

Deputy Prime Minister Petr Necas added that the government was not against the sale of Prague airport, but that it must first be transformed into a joint stock company and prepared for sale, meaning next year was not a realistic privatisation target.

Tlusty said it may be better to lease the airport, one of the busiest in central Europe, instead of selling it.

((Reporting by Jan Lopatka, Writing by Alan Crosby; editing by Paul Bolding; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

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($1=22.22 Czech Crown)

Keywords: UTILITIES CZECH CEZ