Czech vice PM says sticking to CEZ sale plan

PRAGUE, Oct 16 (Reuters) - The Czech Republic's minority right-wing cabinet will continue preparations for the sale of a small stake in power firm CEZ <CEZPsp.PR> despite opposition protests, Deputy Prime Minister Petr Necas said on Monday.

The state holds 68 percent of one of the EU member's most profitable companies, and the government says it needs the money to pay for road construction. The government intends to sell CEZ shares worth a total of 31 billion crowns ($1.4 billion).

Necas told reporters he could see no other way for the government to get the 30 billion to 40 billion crowns needed early next year for the budget other than through the sale of part of CEZ, Europe's second-largest energy exporter.

"There are no (other) privatisations currently prepared, so the only option is the sale of stakes in firms which are at our disposal ... (so) that the revenue can be included in state budget revenues and investment plans can be started," Necas said.

The leftist Social Democrats have said they could support the government's 2007 budget if plans to sell a roughly 7 percent stake of CEZ were dropped.

"We are talking about the first four (or) five months (of 2007)," Necas said, adding that a stake in the Prague Airport might also be sold in late 2007.

The government lost a confidence vote earlier this month but remains in office as a caretaker administration while political parties quarrel over how to end a stalemate delivered by an inconclusive election in June.

The government wants to hold an election next spring, while the Social Democrats are proposing a grand coalition of the two parties and an election in 2008.

In response to the government plan, CEZ said in late September it was considering a share buyback of up to 10 percent and might decide on the plan within a month.

((Reporting by Jan Korselt, writing by Jan Lopatka, editing by Jane Baird; prague.newsroom@reuters.com; Reuters Messaging: jan.lopatka.reuters.com@reuters.net; +420-224 190 474))

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Keywords: ECONOMY CZECH CEZ