Controversy has engulfed the last round of the Czech privatisation programme after the government rejected all foreign bids for one lot and postponed another sale.

The cash-strapped government of Prime Minister Milos Zeman had hoped to raise up to 300bn crowns (�5.8bn, $8.5bn) from the sales.

But fuel distributor Unipetrol could not be sold at the expected price, and was finally sold for a much lower price to a domestic bidder.

The sale of power utility CEZ, meanwhile, had to be postponed, with the government complaining about the quality of bids.

"The government of the Czech Republic is no (pushover) which can be given undervalued bids," Mr Zeman told reporters as he defended the decision to delay the sale of CEZ.

The privatisations would have marked the end of a decade of free market restructuring designed to gain the Czech Republic EU membership.

'Not a banana republic'

The sale of CEZ, which was expected to raise about 200bn crowns, has been pushed back to 7 January so the government could hold more talks with bidders Electricite de France and Italy's Enel.

Enel's bid amounted to just 140bn crowns, well short of the 200bn reserve, Mr Zeman said, and the cabinet did not even open EdF's bid, as it did not conform to tender rules.

"I want to believe that an equally reasonable result will be achieved on 7 January in the CEZ sale after some bidders realise we are not a banana republic," Mr Zeman said.

There were more surprises when the government awarded 63% of Unipetrol to domestic fertiliser firm Agrofert, which bid 11.5bn crowns against British rival Rotch Energy's 14.2bn crowns.

No novices please

"We gave Agrofert the lead because we were looking not only for a financial investor, but a strategic one as well," Deputy Finance Minister Tomas Potmesil said.

"We did not want an investor with no experience in the petrochemicals sector," he added.

Rotch Energy would not comment on whether they would appeal against the decision.

Only the sale off a 97% stake in monopoly gas importer Transgas, and stakes in eight regional distributors, to Germany's RWE went according to plan.

RWE Gas beat bids from US-based Duke Energy and Germany's E.ON, a group including Gaz de France and Germany's Ruhrgas, with a higher-than-expected bid of 130bn crowns.

Shares in CEZ fell 3.03% after the news while Unipetrol dropped 8.19%.