Financial details of the deal were not disclosed.

The coal-fired Pocerady power plant is situated in the north-west part of the country, almost in the middle of Louny, Zatec, and Most towns.

Long-term agreement between the two companies is expected to stabilize both the electricity and coal market and create job opportunities in the market.

CEZ board chairman and chief executive officer Daniel Benes said the contract may extend beyond 2060 and bring stability for the companies and improve local economy.

"At the same time, we can now focus on large capital projects aimed to improve the operation of the Pocerady power plant as well as the Vršany surface mine," Beneš added.

The coal-fired plant is set to be upgraded in 2016 when CEZ Group has an option to sell the facility to Czech Coal Group and will have another such option to divest the plant in 2024.

Vršanská uhelná is a part of Czech Coal Group.