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EU Executive Set To Blast Czech Public Tender Record

The European Commission's criticism of the Czech government's record on public tenders intensified last week over exclusionary conditions set for the sale of majority stakes in two coal mining companies, Severoceske Doly (SCD) and Sokolovska Uhelna (SU).

The Commission was consulting with its legal experts on several of the tender conditions, but a preliminary analysis revealed they contradict an international agreement adopted by the Czech government, said Stephane Ouaki, desk officer for the Czech Republic at the Commission's enlargement directorate.

The Commission also criticized the opposition Civic Democrats' plan to propose an amendment to a public tender bill that would exempt the country from EU directives and favor Czech companies in tenders. Such an exemption, Brussels warned, would deprive the Czech Republic of EU structural funding.

Commission concerns over Czech public tenders will feature prominently in its last pre-accession report on the country due on Nov. 5. The report will express "serious concerns" over the Czech public tender law, Ouaki said.

In the country, criticism sharpened over the impending sale of 55.8 percent in SCD and just over 50 percent in SU, with speculation rife that the SCD tender was tailor-made for energy and commodity trader Appian Group, which controls engineering works Skoda Plzen and mining company Mostecka Uhelna Spolecnost (MUS).

The commission concerns over the coal mining tenders stem from the tender conditions excluding companies from neighboring countries—especially Germany and Austria. Deputy Minister Martin Pecina of the Ministry of Industry and Trade, which set the conditions, told the daily Mlada Fronta Dnes in July that this was to prevent German companies from importing coal instead of mining it.

So far, Appian has confirmed its interest in SCD and Richard Lappin, the head of International Power (IP) in Central and Eastern Europe, said IP will bid for SU. IP owns Elektrarna Opatovice, one of the largest independent Czech power plants. Rumors have abounded for months that the SCD tender was tailor-made for Appian, as an accompaniment to its ownership of neighboring MUS.

Finance Ministry and National Property Fund officials referred questions about the tender to the Ministry of Industry and Trade last week; PBJ could not reach the spokesman, but when asked in July about the conditions of the sale and speculation about Appian, he told PBJ the ministry saw no reason not to sell to Appian.

(PBJ 13.x.03)

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