March 26, 2018 / 1:15 PM / in 8 months

UPDATE 1-Prague needs to decide nuclear investment before CEZ break-up -minister

(Adds quotes, details on possible CEZ split)

PRAGUE, March 26 (Reuters) - The Czech government should decide on an investment model for building more nuclear power blocks before it decides whether to split the CEZ utility, Industry Minister Tomas Huner said on Monday.

Huner heads a key committee on the matter and his comments add clarity to a debate about whether to split the utility that is majority owned by the state to help finance the new units in a country that relies on nuclear for a third of its electricity.

CEZ has so far refused to build without explicit government backing given the high costs relative to current power prices.

The committee has debated options including having a CEZ subsidiary build the new units with some form of state backing or having the state buy a CEZ unit to build the plants.

A third option would be to split CEZ and transfer nuclear and coal plants to a state company while the government reduces its stake in remaining business such as renewable sources and possibly distribution.

CEZ favours a split that would put a state entity in charge of the risky business of building a nuclear plant. It also says a split would raise the value for all shareholders because regulated assets are typically valued at higher multiples than power production.

CEZ says such a split could raise its combined market capitalisation, now at $13.1 billion (10.56 billion euros), by about 2.6 billion euros. The committee said on Monday it would make a recommendation to cabinet by May for a decision in June.

“The sequence should be following: investment and financing model and only after that let’s talk about movement of assets, and about the form of the company that the government would buy,” Huner told reporters.

“We as the state are not opposing buying some CEZ assets, there are about seven options from nuclear plants, or possibly coal plants, the prime minister mentioned he would like to see distribution here as well.”

The country’s special envoy for nuclear energy, Jan Stuller, said alongside Huner experts advising the committee were leaning toward having the state invest in the new plant.

This could include the state taking over some CEZ assets.

CEZ Chief Executive Daniel Benes told Reuters and Bloomberg last week that he would like a decision by mid-2018 on the company’s transformation plans.

1 euro = $1.2405 Reporting by Jan Lopatka

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