London, 19 March (Argus) — Czech state-controlled utility Cez has agreed a long-term lignite supply contract with privately-held mining firm Czech Coal.
The companies have been haggling over the contract for years and the previous supply deal expired at the end of 2012, although deliveries have continued this year under a short-term agreement.
The supply is for Cez's 1GW Pocerady power plant and the deal could eventually result in Czech Coal purchasing the plant. Cez will initially pay 38.80 koruna/gigajoule (GJ) for lignite, gradually rising to reach 65pc of the price of hard coal delivered to Amsterdam, Rotterdam and Antwerp by 2023. This is equivalent to around Kc48/GJ at this year's prices, according to Cez.
The deal will last until 2060. It includes an option of supplies after 2024 to any new plant that is built at the Pocerady site. Cez will purchase 5mn t/yr from Czech Coal, down from 8.5mn t/yr under the previous contract.
Pocerady is undergoing an upgrade to bring it in line with EU emissions legislation from 2016, when Cez and Czech Coal may agree on the plant's sale at a pre-negotiated level. Alternatively, the two companies have another opportunity to agree the sale in 2024.
Chvaletice sale
Cez also announced today that it will sell the 800MW Chvaletice power plant to Czech Coal for Kc4.12bn. Cez will keep 90pc of the free emissions allowances allocated to Chvaletice and will use these to further upgrade its power plants, the utility said.
The four units at Chvaletice were commissioned between 1977 and 1978. It is located in eastern Bohemia, a significant distance from any mines, with lignite delivered by railway.
The deal will require approval from the European Commission. The commission began an investigation into the Czech power sector in 2009. Cez made a settlement agreement with the commission last year to sell at least one of its coal-fired power plants.
The utility said the sale of Chvaletice, and potentially Pocerady, is in line with its strategy to operate only highly efficient lignite-fired units which it can supply from its own mines.
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