How is the Czech government doing on energy? So far, it resembles an elephant in a china shop

During its time in office, Petr Fiala’s government has already been involved in quite a few controversies in the energy sector in Czechia. Statements by government officials or representatives of the governing parties about the possible nationalisation of ČEZ have regularly sent shockwaves through the capital market. Moreover, at a time when it is clear that the Czech energy sector will need very substantial investment to undergo its transformation, the government is sending investors the wrong signals. One of the latest and most consequential statements came from Finance Minister Zbyněk Stanjura, who said the state plans to cut operating subsidies for supported energy sources, citing an Ministry of Industry and Trade analysis that may not even exist.

The government has been dogged by controversy over energy

One of the first major controversies concerned the process of introducing the windfall tax, which proceeded in a highly irregular manner and significantly affected, for example, the share price of the Czech energy giant ČEZ. There was speculation that the measures were deliberate and aimed at reducing the company’s market value, given the state’s announced intention to take control of its generation assets. This was especially so when the tax coincided with a levy on “excess revenues”: due to the energy crisis, limits defining excess revenues were set for specific types of power plants—for PV plants, for example, at 180 EUR/MWh.