Thursday, 24 April 2014

ČEZ's Albanian division ČEZ Shperndarje up for sale

18 December 2012

Prague, Dec 17 (CTK) - Energy company CEZ has offered its Albanian power distributing division CEZ Shperndarje for sale and potential buyers can show their interest in January, CEZ spokeswoman Barbora Pulpanova announced yesterday.

The Albanian division is loss-making and the company has years-long disputes with Albanian authorities.

CEZ Group will decide on further course of action only when potential buyers show their interest. The group is also still in talks with the Albanian side about how to solve the situation, Pulpanova said.

CEZ in November claimed compensation for the failed investment from the guarantee provided to it by the World Bank. CEZ negotiated the guarantee before entering the Albanian market to protect itself in the unconsolidated business environment.

CEZ Group entered Albania in 2009 when it gained 76 percent in the local distributing company. It got into problems this year after Albania's regulator raised prices the distributor pays to the state-controlled power producer by 91 percent. However, the distributor was not given the possibility to raise prices for end customers at the same time.

CEZ Spherndarje also has to grapple with the poor payment discipline of Albanian buyers. CEZ Shperndarje in November disconnected electricity supplies to Albania's state-owned water utilities that owed it EUR38m (Kc960m) in total for power supplies.

A court in Tirana ordered it, however, to hook the utilities to the grid again. Albanian authorities then started proceedings to withdraw its licence which could lead to ending of CEZ's activities in the country.

CEZ Shperndarje problems are also reflected in the business results of the entire CEZ Group. CEZ chief executive officer Daniel Benes said this year that the most likely solution to the situation would be CEZ's departure from Albania.

Rating agency Moody's calculated in November that CEZ's immediate departure from Albania would mean a loss of almost EUR200m (Kc5bn) for CEZ. On the other hand, the move would prevent further losses, Moody's added.

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