Friday, 18 April 2014

Moody's: Exiting Albania would cost ČEZ EUR 200m

27 November 2012

Prague, Nov 26 (CTK) - An immediate departure of Czech energy group CEZ from Albania would mean a loss of almost EUR200m (Kc5bn) for CEZ, server Business New Europe said yesterday citing a report by the Moody's agency.

The departure would nevertheless prevent CEZ from incurring further losses in Albania and would thus protect its future revenues, according to Moody's.

IF CEZ decided to leave Albania, it would write off EUR102m for its initial investment in Albanian power distributor CEZ Shperndarje and another almost Kc100m that it has transferred to its Albanian division so far.

The losses could be moderated if CEZ managed to apply a guarantee worth EUR60m that the World Bank had provided to CEZ upon its entry in Albania.

By its departure from Albania CEZ would also save Kc4bn that it planned to invest in the Albanian division in the next five years.

According to Moody's, the development in Albania is negative from the viewpoint of CEZ's obligations. The rating agency has nevertheless kept CEZ's rating at A2 with a stable outlook.

The situation in Albania sharpened ten days ago when CEZ Shperndarje disconnected electricity supplies to Albania's state-owned water utilities that owe it EUR38m in total for power supplies.

A court in Tirana, however, ordered CEZ to hook the utilities to the grid again. Albanian authorities then launched proceedings to withdraw CEZ's licence, which might lead to a wind-up of the company's business activities.

CEZ has had problems with its Albanian investment for some time already as Albanian companies often do not pay for electricity supplies. Moreover, the Albanian regulator last year almost doubled the tariffs which CEZ Shperndarje pays to the Albanian state-owned electricity company without permitting the distributor to project the hike in tariffs into the prices it charges customers.

The CEZ Shperndarje division is loss-making, which affects business results of the entire CEZ Group. CEZ chief executive officer Daniel Benes has said recently that the most likely solution to the situation would be CEZ's departure from Albania.

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