Govt may use CEZ dividends to help firms cope with rising costs-Babis

Olomouc, North Moravia, May 26 (CTK) - The government should use dividends of energy group CEZ to help entrepreneurs handle the steeply rising production costs and interest rates because of high inflation, former prime minister Andrej Babis said at the Chamber of Commerce's congress today.

The cabinet could use Kc60-70bn from retained earnings of CEZ for the purpose, said Babis, chairman of the opposition movement ANO.

Prime Minister Petr Fiala (Civic Democrats, ODS) said the dividends will be used for help to citizens but the cabinet must be cautious so that its step does not trigger inflation spiral.

"I have repeatedly asked the cabinet to use the dividends," said Babis. Retained earnings are worth Kc150bn, according to him.

The government should help entrepreneurs with guarantees, he added.

The government has sufficient financial resources. "It has a record VAT collection for the first four months of the year, it has an extra Kc24bn. CEZ is rolling in profit and Czech finance is in great condition," Babis said.

According to him, the cabinet can also place a cap on fuel prices.

Fiala told journalists that if the cabinet distributed CEZ's profit as suggested by Babis inflation "would be rising to the sky" and debt would go up.

"We can't do that," Fiala said, adding that CEZ is not owned by the state.

The state has a 70 percent stake in the company that has also smaller shareholders and is listed on the Prague bourse. "The idea that I come and say so now we take and distribute the dividends in the middle of the year is really very naive and unrealistic," Fiala said.

Amid current high energy prices, it is hard to explain CEZ's big profits to entrepreneurs, Chamber of Commerce president Vladimir Dlouhy told journalists

"I can explain it to myself, but do not know how to explain it to entrepreneurs," Dlouhy said.

According to him, the cabinet should make use of the entire stake in CEZ. Another - and quite difficult - question is how it will use the money not to boost inflation, said Dlouhy.

Compensations to firms over high energy prices will not be the basis for the government's policy, said Industry and Trade Minister Jozef Sikela. They can weaken and slow down the industry's willingness to adapt to energy changes, according to him.

In addition, the state's options are limited because of generosity of the previous government, Sikela said at the congress.

The cabinet plans to invest tens of billions of crowns in energy efficiency and development of energy sources. In July, the ministry will make a call to improve energy efficiency of companies with an allocation of up to Kc10bn, said Sikela.

Under a programme of indirect cost compensations, which is being drafted along with the Environment Ministry, energy-intensive companies will get more than Kc800m for energy saving projects this autumn, Sikela said.

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