The Czech utility CEZ has abandoned plans to upgrade a 330 MWe coal-fired power plant and decided instead to sell the station.

CEZ attributed its change of heart to the state of the economy, which underwent a recession last year. Deregulation of electricity tariffs has not proceeded as fast as it would wish, putting further financial pressure on the company.

The company has not said how far it has progressed with the planned upgrade. However it suggested that even when modernized, the plant would not be as efficient as modern lignite-fired plants.

The proposed sale comes as CEZ management has reexamined all its investment activities in the light of the economic situation in the Czech Republic. Domestic demand for electricity shrank from 53.2 TWh in 1997 to 52.2 TWh in 1998. CEZ expects little increase in demand this year.

Tariffs are also an issue for CEZ. The government has said it plans to raise regulated household tariffs above the cost of generation in a services of steps until 2002. It had previously been expected that regulation would end in 2000. CEZ is building a 2000 MWe nuclear power plant at Temelin which is due to open in 2001.