TIRANA, Oct. 8 – In an unexpected decision, Sahit Dollapi has resigned as CEZ administrator, citing government plans to nationalize the company which has been under state administration for the past nine months after the Czechs had their licence revoked in early 2013. Dollapi submitted his resignation on Tuesday after introducing a report on the company’s financial situation to ERE, identifying the company’s progress with bill collection and grid losses under his management.
“These nine months of the company’s temporary administration also proved this would have been the most successful privatization if honesty, professionalism and dedication would have been the criteria of the former directors of this company,” said Dollapi.
Dollapi’s resignation comes few days before the Socialist Party-led majority elects a new head of the Energy Regulatory Entity, the energy watchdog which also supervises the distribution operator and appoints its director.
“After nine months of temporary administration, the government has decided to end this transition period with a request to ERE to start the nationalization procedures. As an experienced expert of the energy system, and remaining loyal to my conviction that the final solution is the privatization and the liberalization of the market, I have decided to submit my resignation as CEZ’s administrator to ERE,” said Dollapi
Before announcing his resignation, Dollapi made a detailed presentation of CEZ’s situation in the past nine months under his lead, saying that the company’s indicators had improved.
“Operating loss for the first nine months of this year dropped to 5.8 billion lek (Euro 40 million), which is 10 billion lek less compared to last year. We have fed more electricity into the grid, billed more by improving the level of grid losses,” said Dollapi.
Inviting candidates to submit their applications, Energy regulator ERE says the new CEZ administrator will be selected on October 14.
Dollapi announced his resignation few days after he publicly challenged he would not resign and that energy regulator had no reason to dismiss him because of his positive performance as CEZ administrator. With his resignation, Dollapi has also preceded possible dismissal by ERE which is expected to have a new head in the next few days. The directors of KESH power corporation and OST transmission operator have already been dismissed in the past few days.
Grid losses in Albania’s distribution system, which since January 2013 has been back under state administration after Prague-based CEZ Group had its Albania licence revoked, have registered a slight drop, but yet remain high at around 37 percent of electricity fed into the grid. The latest energy report published by the country’s state Institute of Statistics (INSTAT) shows grid losses in the first half of this year dropped by 4.6 percent to 37.2 percent compared to the same period in 2012 when CEZ Shperndarje distribution operator was under the Czechs’ administration.
Sahit Dollapi, a former director of the OSSH distribution operator just before it was taken over by the Czechs in 2009, has been accused by the Socialist Party of mismanaging the distribution operator for personal and political gain. Dollapi, who is a senior member of the opposition Democratic Party, also served as director of the Tirana water supply enterprise until taking over as CEZ’s temporary administrator.
Last September, ERE decided to suspend CEZ’s tender on the purchase of 1.3 million GWh for 2014 so that it could be carried out by the new government.
Arbitration dispute
The new Albanian government will also have to handle relations with CEZ distribution which in January 2013 was stripped of its Albania licence by the previous government because of because of failing to meet contract obligations. Czech Republic-based CEZ Group, whose Albanian power supply subsidiary CEZ Shperndarje, was stripped of its licence last January, says it has officially initiated international arbitration procedures to claim compensation for the damage incurred in Albania. CEZ says it will claim Euro 200 million in international arbitration while the Albanian government claims that CEZ’s failure to fulfill its contract obligations over imports, investments and reducing grid losses caused the state USD 1 billion in damage.
“The arbitration proceedings have been formally initiated by sending a ‘notice of arbitration.’ However, this does not prevent a potential out-of-court settlement between the parties,” says CEZ. The CEZ Group entered the Albanian market in May 2009 by acquiring a 76 percent equity stake in the Albanian power distribution company for Euro 102 million.
CEZ blames the situation in Albania on tariff disputes with the Energy Regulatory Entity and heavy fines imposed by local authorities.
