Albania set to block sale of CEZ Shperndarje

By bne IntelliNews December 20, 2012

bne -

Albania announced on December 19 that it intends to put a stop to the sale by CEZ of its local loss-making electricity distribution monopoly, asserting that the Czech power giant owes the government around $1bn in damages.

As the partner holding the remaining stake in CEZ Shperndarje, the government said it regrets it was not been informed of the sale, reports Reuters, especially as it has been negotiating with CEZ for months on how to reach a "stable" solution. "The Ministry of Economy, Trade and Energy will undertake all the necessary legal steps to block this process," it said in a statement. "CEZ has failed to meet its key obligations, causing Albania damages of about $1bn."

With Albania's regulator ERE due to rule this week on whether to start procedures to revoke CEZ's operating licence, the company announced on December 17 that it was putting its 76% stake in CEZ Shperndarje up for sale. However, the Czech utility added that it will decide on a further course of action only when potential buyers show their interest. CEZ also stressed that it is still in talks with the Albanian side about how to resolve the situation.

A representative from ERE insisted at the time that companies cannot not move their assets without seeking permission from the regulator first, noting that CEZ had not discussed its invite for bids.

Relations between Albania and CEZ hit a new low in NOvember when the Czech utility cut off several of the country's water companies for non-payment of bills. The authorities forced the company to hook them back up, and said it would seek to have CEZ's licence revoked.

CEZ promptly threatened to sell the unit, which it claims it is forced to run the company at a loss due to a hike in wholesale prices from the state-owned generator, in combination with the regulator's refusal to allow it to raise consumer tariffs. The government claims that mismanagement is causing the problems.

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