Analysts: GasNet takeover gives ČEZ critical Czech gas infrastructure and boosts its market position

Energy group ČEZ will gain control of critical gas infrastructure in Czechia by taking over GasNet, significantly strengthening its position in the gas market, analysts contacted by the Czech News Agency (ČTK) say. However, they do not expect a more significant impact on the domestic energy sector. In their view, the question remains whether the price ČEZ paid for its majority stake in the company was worthwhile. The partly state-owned energy company announced yesterday that it had completed its acquisition of a majority stake in GasNet, the country’s largest gas distributor. ČEZ paid 846.5 million euros (approximately 21.2 billion Kč) for its 55.21% stake in the distribution company. The stake was previously managed by Macquarie Asset Management.

According to Lukáš Kaňok, director of the energy division at Kalkulátor.cz, ČEZ’s efforts to expand its role in gas management are an understandable move. He pointed to the planned phase-out of coal-fired generation. “The only alternative to coal today is gas. Although we are trying to cut ourselves off from Russian gas, it is perfectly clear that overall gas consumption will grow significantly,” Kaňok said.

He said it was not yet possible to rely on wind and solar farms to replace coal-fired generation, because their output is difficult to forecast and manage, or on nuclear power, because it will still take time to build new units. “The only question is whether it is right for such important infrastructure to be held by the state through a company that is not wholly state-owned,” Kaňok noted.

XTB analyst Jiří Tyleček pointed out that ČEZ will now become the owner of critical energy infrastructure, significantly strengthening the company’s position in the gas market and, in the future, in hydrogen as well. He also does not expect major changes in the domestic energy sector. In his view, the only question may be the price, which some may consider high at first glance given GasNet’s loss and debts last year.

“The major challenge will be finding a profitable long-term business model. Gas consumption has been declining over the long term, and as a fossil fuel, gas has no bright future ahead. There is talk of replacing gas with hydrogen, but from today’s perspective that future is too distant for this argument to justify the GasNet acquisition,” Tyleček added.

GasNet supplies natural gas to households and businesses throughout the Czech Republic except for Prague and the South Bohemian Region. It manages 65,000 kilometers of gas pipelines and has more than 2.3 million customers. It therefore holds approximately an 80% share of gas distribution in Czechia. ČEZ is already the country’s main electricity distributor. GasNet posted a loss of more than 303.5 million Kč last year. The year before, the company reported a net profit of more than 1.89 billion Kč. The company’s revenue also fell by approximately 6% year on year last year, to 13.5 billion Kč.