(Bloomberg) — Shares of leading Czech energy utility CEZ AS have fallen to their lowest level in nearly four months amid ongoing political maneuvering surrounding the state-controlled company.
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CEZ shares closed 2 percent lower in Prague on Wednesday, extending losses triggered by government signals that it is no longer considering removing a special tax before its original expiry date. Eastern Europe’s largest listed power producer has lost 10 percent this year, slashing its market value by the equivalent of about $2.3 billion to its current $21 billion.
“CEZ is a great company, but it is burdened by an irrationally high special tax that amounts to around 10 percent of its turnover,” says Michal Semotan, equity analyst at J&T Investicni Spolecnost AS in Prague. “There are not many reasons to buy at the current price. The end of the special tax is too far away.”
The utility has long been embroiled in political interference revolving around efforts to strengthen state control over energy assets, plans to build more nuclear reactors and securing additional funds for the budget. The latest blow came from Finance Minister Zbynek Stanjura, who said he no longer plans to propose the earlier abolition of the special levy approved for the largest energy companies and banks for 2023-2025.
Although Stanjura had proposed abolishing the special levy a year earlier, last week he said the levy must remain in force because the total revenue from the measure is still not enough to cover government spending on mitigating the effects of the European energy crisis.
The government is trying to balance rising spending on infrastructure projects and defense with promises to reduce the budget deficit, and the special tax represents a significant portion of the additional budget revenue.
CEZ, in which the state holds around 70 percent, contributes by far the largest share of state revenues from the special tax, which has led to conflicts between the Ministry of Finance and private investors.
(Updated with closing price in second paragraph.)
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