Czech giant CEZ has applied for €60m in compensation under a World Bank guarantee as its investment in Albania's power distributor approaches an unsavoury end.
The guarantee was granted in 2009, when the Czech utility purchased the assets from Tirana. The Czech company bases its claim on an argument that Albania has abused the distribution rights of CEZ Shperndarje, spokeswoman Barbora Pulpanova said, according to CTK.
The formal step kicks off a 60-day period during which CEZ can attempt to resolve its dispute with the Albanian authorities. If no agreement is reached - and the pair has been arguing for some time - the World Bank's guarantee can then be claimed.
The guarantee - worth a maximum of €60m - was negotiated by CEZ as protection as it before entering the unconsolidated Albanian market. "Now the rights of the distributing company have clearly been broken. The situation is very critical," said CEZ distribution and foreign assets division director Tomas Pleskac.
The application to the World Bank only adds more evidence that the endgame in the long-running dispute between CEZ and Tirana is now playing out. The company complains that low tariffs, high unpaid bills, electricity theft and erratic taxation are making it impossible to trade profitably. Tirana says the poor performance is due to CEZ's mismangement.
On November 20, CEZ said it will appeal against a local court's order for the utility to halt power cuts to water companies and others who refuse to pay their debts, as the battle escalates into a full blown war. CEZ Shperndarje disconnected Albania's state-owned water utilities on November 16 over a €38m outstanding debt. However, a court in Tirana ordered it to hook the utilities back up to the grid again. CEZ complied with the court's order to avoid fines.
Albanian authorities have also officially announced to CEZ Shperndarje that they have started proceedings to withdraw its licence. If this happens, CEZ has said it will try to protect its investment by means of an international arbitration. Meanwhile, the Czech company has made no bones about its weariness with its Albanian adventure, and has said it will look to exit.
bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more
bne IntelliNews - Following a smorgasbord of acquisitions in late summer, China Energy Company Limited (CEFC) is eyeing yet another small Czech purchase, with food ... more
Benjamin Cunningham in Prague - Even as the Czech governing coalition remains in place and broadly popular, tensions between Prime Minister Bohuslav Sobotka and Finance Minister Andrej Babis remain ... more