CEZ borrows 100 mln Euros from EBRD, IFC to improve power grid

TIRANA, July 4 – Albania’s electricity distribution operator, whose majority stake is owned by the Czech Republic’s CEZ, has signed a Euro 100 million loan agreement with the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation that will refurbish the distribution network and improve the quality of electricity supply.
“The 12-year senior corporate loan is co-financed by the International Finance Corporation, providing a Euro 50 million loan in parallel. The investments will result in a more efficient use of existing energy resources and increase the quality of electricity supply across Albania’s national grid,” said the EBRD in a statement.
Once fully completed by 2014, the planned modernization works will improve the reliability of electricity supply by reducing losses in the distribution network. As part of the planned improvements, CEZ Shp쳮darje will also install new modern meters and implement a new billing system to raise its revenue collection rates.
In addition, CEZ Shp쳮darje will use this loan to refinance its debts and optimize the company’s cash-flow and balance sheet.
“The Bank is very pleased to support this modernization project which will help Albanian customers have a reliable and high-quality electricity supplies. The investments made under this project by CEZ Shp쳮darje will bring energy efficiency improvements in the country’s power system in line with the highest international standards,” said Nandita Parshad, EBRD Director for Power and Energy.
Since the beginning of its operations in Albania, the EBRD has invested over Euro 570 million in various sectors of the country’s economy, mobilizing additional investments of more than Euro 1.3 billion.
CEZ Shp쳮darje, a subsidiary of ČEZ Group since 2009, owns and operates the entire 110kV distribution network in the country for a total length of 69,000 kilometers, serving around 1.1 million customers. ČEZ Group, a major Czech-based utility company, serves 9 million customers across 12 countries in Central and Southeast Europe, with significant involvement in the Albanian power sector.
“The loan will be used to invest in the outdated electricity distribution network which has a negative impact on the level of technical and non-technical losses, which remain among the highest in Europe,” said CEZ, which has been managing the former state-owned distribution system for more than two years. The repair of the dilapidated parts of the grid would also lower technical and non-technical power losses, which have a key impact on electricity prices. The company says that the loan is vital for its investment plans and “that it cannot and will not be able to invest in the Albanian distribution system without getting the loan from the international banks.” CEZ Shperndarje (Distribution) says investments in Albania’s distribution network in 2010 grew to 4.5 billion lek (USD 45 million), up from 3.9 billion lek in 2009. The 2011 investments are estimated at 4.9 billion lek. CEZ says electricity losses in 2010 dropped to 30.4 percent, down from 33.92 percent in 2008 and 2009. Its bill collection rate also slightly improved to 78 percent compared to 76 percent in 2009.
In March 2009, CEZ signed a contract with the Albanian government after buying 76 percent of OSSH’s state-owned shares for 102 million Euros. Last December, Albania’s Energy Regulatory Agency (ERE) decided to keep electricity prices for 2011 unchanged, turning down requests by the three local operators who had wanted to increase power prices by an average of 12 percent. Albanian household and business consumers will sign new electricity contracts with CEZ Shperndarje, starting next September. The new draft contract obliges CEZ to provide 24/7 power supply and compensate household and business consumers in case of power failures. For more than one month, CEZ has been offering the e-bill service, which allows every client to check electric bills online and print their monthly invoice.