Friday, 24 November 2017

Jan Mládek: ČEZ should give state more of its profits next year

By Zuzana Kubátová | Hospodářské noviny |
25 September 2009

The Social Democrats want to push ČEZ to hand over a higher proportion of its profits than this year's 57% to the state in 2010. "I can even imagine that part of the ČEZ's undivided profits of previous years would be used for strengthening of the state budget," says Jan Mládek, the ČSSD's chief economic expert.

ČEZ saved some CZK 140 billion in the past. Do you want the company to help the state with this money?
It is possible to use the undivided ČEZ profits but the question is whether it is necessary. I would prefer a standard path of increasing the limit for the dividend pay out. The ČEZ general meeting will decide on this in spring next year. Extraordinary moves make investors more nervous and I do not see reason for an extraordinary general meeting that would decide on the dividend earlier than in spring.

How much more should the state get from ČEZ next year
It is not about the dividend. We propose an increase of income tax for corporate entities, or rather, it's return to the 2008 level. Through this move the state would get some CZK 1 billion more from ČEZ. Also, the limit for the part of the profit that is earmarked for dividend should be increased.

Do you want to spend all ČEZ profits on dividend?
I can imagine that. However, I am not sure that the division of 100% of profit would be appropriate. ČEZ has many investment activities that need to be taken into account. Then there are private ČEZ shareholders. Those would be pleased by higher dividend from a short-term perspective but the question remains of how they would see it from the perspective of long-term evaluation of the company. Personally, I would warn against 100% drawing of profits. Today there is a political consensus concerning conclusion of Temelín nuclear plant construction and that will require a lot of finances. It would be better if ČEZ finances it from the undivided profit rather than loans. At the moment, I cannot say what part of the profit should be divided among the shareholders but there definitely is space for limit increase.

The main objection of Martin Kocourek of the ODS against the superdividend is that it would be private ČEZ shareholders who would profit from the budget problems
I have to laugh at that! Honestly, I would expect that kind of argument form KSČM rather than from an economic expert of a right-wing party.

Finance Minister Eduard Janota says that the ČEZ superdividend will not help the state since it cannot be included in the state budget income and so it will not lower the state deficit. Does it make sense at all, then?
I am aware of that problem. I don't know if it can be solved. It can at least be discussed with Brussels. Many people still consider the published numbers of state deficit as given. In reality, however, there is a so-called notification – a discussion, even squabbling, about which item will be included in the deficit or not. This requires Janota to lead more active discussion with Brussels.

What would you like to use the extraordinary ČEZ income for
There are two things: 13th salary and support of families with children. Some CZK 6 billion – 7 billion would go towards pensions and further CZK 2 billion – 3 billion towards children. The magic lies in its legitimacy. Since the Czech state is not capable to effectively regulate ČEZ's monopoly, ČEZ collects monopoly-like profits. It is legitimate for part of those profits to be returned to those in need.

Finance Minister counts on the ČEZ revenue mainly for the elimination of old ecological damages. Should social compensations get the preference?
According to the Finance Ministry, it is one of the possible opinions. It is necessary to have a discussion concerning that money. I think it is slightly less legitimate to use them for ecological damages than for pensions. That, however, is a question for political discussion, it is necessary to adopt a political decision.

Should the state continue the sale of ČEZ state shares, as some of the experts recommend?
Further sale of state stake is not an issue at the moment. It is not suitable from the short-term perspective – share prices are still low. From the long-term perspective? I can imagine drop of state stake in ČEZ to 51%. Nevertheless, I understand the voices recommending the state to preserve its super-majority. If the state stake decreases, there would definitely be attempts at taking the majority away from the state altogether, just as it has already happened a couple of times in the past.