CEZ says it is determined to cut power to all debtor state institutions which owe the company USD 65 million
TIRANA, Aug. 13 – A warning issued by CEZ Shperndarje distribution operator to cut power to all debtor public institutions has mostly been ignored by the company. After the ultimatum expired on August 7, two days later CEZ announced a campaign to cut power to debtor budgetary and non-budgetary institutions as well as the administrative offices of debtor water supply companies but not pumping stations which a year ago sparked violent protests because of leaving the country without running water.
“CEZ Shperndarje set a reasonable deadline to all these institutions to pay off their outstanding debts, but none of them reacted to pay off their outstanding bills. This was a repeated appeal which CEZ Shperndarje was making to these institutions and in several months they had been officially notified of their obligations to the company and in most cases admitted they were debtors to CEZ,” said the company in an announcement. CEZ says these institutions owe the company USD 65 million, without including late-payment penalties.
CEZ Shperndarje expresses its determination to cut power to all debtor institutions until they pay their debts. “CEZ Shperndarje guarantees citizens that this company will treat its private and state customers under the same standard, supplying electricity to those who pay bills and disconnecting all those who don’t pay bills.”
CEZ has also published a list of debtor budgetary and non-budgetary institutions and the debts of each institution to the company.
Albpetoil oil company tops the list of debtor institutions with 652 million lek. Next come the Durres and Vlora water supply companies with 468 million lek and 395 million lek respectively.
The southwestern city of Fier is one of the few to suffer from CEZ’s ultimatum. The city’s public lighting has been cut off since several days due to accumulated debts the local municipality owes to the distribution operator. Local media report households who have power cut because of unpaid bills or illegal connections often reconnect immediately after CEZ teams leave.
The precedent with the Czechs
In November 2012, government-CEZ conflict reached its peak after CEZ cut power to debtor water supply companies leaving half of Albania without water and sparking nationwide protests which lasted for only few hours after police intervened arresting several CEZ employees and forcefully reconnected power. The warned extreme measure by CEZ on Nov. 16 left some of Albania’s key cities such as Durres, Elbasan, Lezha, Vlora and Fier and Korca without water supply for several hours forcing government to intervene after the company cut power to pumping stations in water supply companies which owed the distribution operator Euro 38 million. Government authorities intervened by arresting several CEZ employees and described the measures taken by CEZ as an unprecedented act which severely compromised public security.
Albania’s Energy regulator officially initiated procedures to revoke CEZ’s licence in Albania over the company’s failure to meet contractual obligations on electricity imports, reduce grid losses and not make collective power cuts.
The Tirana District Court banned CEZ to cut power to water supply companies or public institutions until a final and legal deal is reached. Based on this decision CEZ cannot cut power to water supply companies until a legal deal is reached between parties. The Energy Ministry said that for each case CEZ Shperndarje will violate the court decision it will be fined 100 million lek/hour for each power cut.
Arbitration trial
Albania faces an international trial with CEZ Group which was stripped of its Albania licence last January 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.”
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.
CEZ Group reports higher income
Prague-based CEZ Group says its net income in the first half of 2013 grew by 5.3 percent y-o-y to CZK 28.6 bn. The main factor behind the y-o-y net income growth was the end of operations in Albania, correction factors for distribution in the Czech Republic, and trading in emission allowances.
“Anything that is happening in the Albanian distribution company, including complaints filed against it, no longer concerns CEZ because administration of the company, including all decision making rights, was taken over in January by a local administrator who is now responsible for the company’s operation and all its obligations,” a CEZ spokesperson has earlier said.
